I prefer to do everything in hardware where possible. Hardware is cheap (the same cannot be said for software - the abovementioned PIC24 is <$2) and will outperform anything that can be done in software. For example, on the PIC24FJ the built-in hardware multiplier will do a 17x17 multiply in a single instruction cycle - 62.5nS with a 32MHz clock. Compare this to a PIC12/16 (with a 4MHz clock) which needs about 250uS to do a 16x16 multiply operation - about 4,000 times slower.

Right now I'm working a flybarless controller which needs to take inputs from a receiver, inputs from 3 axis accelerometers, do the necessary math intensive (mostly word) computations, then output pulses to the CCPM servos. The pulses should be output concurrently and this is where the hardware PWM becomes really important.