We use a mix of both in a kind of tiered process. We create three images, a Base image, a Firm image and a Standard image. The Base image is created from a scripted OS install, with Windows updates and small configuration changes applied before it is captured. The Firm image is created from the Base image, with our firm's branding applied and license-free common software installed (java, pdf reader, etc). The Standard image is created from the Firm image and has all common licensed software installed (MS Office, etc). We use software deployment tasks and run script tasks to install software and perform configuration automatically in each "build" job, with the output being a hardware independent image we can deploy. The final deploy jobs push the image, then install machine-specific software and settings (remote access software to laptops, etc). Everything is automated except for manually installing windows updates at each step, and a few manual configurations we make in the base image which Windows doesn't make easy to script. About once a month we start from scratch with a base image and recreate all three images. Since we use the same software deployment jobs in the image build process we use to deploy software live, any changes we've made during the month to software (updated, versions, etc) are automatically reflected in our new images.
If you've got any amount of software and customization in your images, I would definitely recommend something along these lines. With the reduced speed of communication of 7.1 compared to 6.9, going from bare scripted OS install to fully-prepped system is a LONG process.