Mix of both. Blocks are handy for simple plateau's, walls and columns etc. They are also more easily to adjust in size after imported in WED. But I find modeling complex level environments (per piece) much more convenient, namely because I find MED and other 3d programs work easier than WED. One thing to remember when using models for your levels is how you import them (as block or as model), it has a major impact on the imported model's lightning/shadow.

In the end, it comes down on what you prefer and how your map is going to look alike. I advice you to try them both out and see for yourself what you prefer.