Its best not to think of this as "dry yeast versus liquid".
Dry yeasts are actually each the same yeast strain as a particular liquid strain, simply dehydrated and preserved in a safe manner. For example, the famous "Chico" yeast strain (WLP 001 for White Labs, 1056 for Wyeast) is exactly the same yeast as the dry Safale US-05. So if your recipe calls for WLP001 or 1056, you can use US-05 dry without any difference at all.
(The only caveat is that over or under pitching can affect flavor)
The main reason you should use liquid strains is if you are wanting a particular strain of yeast that has not been converted to a dry variety yet.
I won't list all the dry equivalent yeasts here, but here's a page with some info:
("Chico" strain is US-05, "Whitebread" strain is S-04, etc)
For me, if I want a neutral yeast that ferments clean and well, then I use US-05 and I know that there are a lot of commercial operations that use it too. Any ale thats "American" in flavor (big IPA's, etc) can use US-05. I also use S-04 for my "English" style beers. S-04 leaves the beer a lad estery, which is good for a lot of English styles. So I'd use dry yeast for IPAs, stouts, porters, browns, pale ales, ESBs, bitters, milds, etc. Basically any beer where the yeast flavor is not noticeable, or has just a slight English twang.
I would NOT use dry yeast for any beer where the yeast is the primary flavor. This includes hefeweizens, Belgians, sour beers, or German ales in general. There are some specialty dry strains that some have used to make German wheat beers and Belgians, but I personally have had poor luck with them.
So look at dry yeast simply as a collection of a few good yeast strains and use them if the beer you are making fits one of those clean strains.
UPDATE: The dry German lager yeast, Saflager W-34/70, has become a new favorite of mine. I've also used the less available S-189 dry lager yeast as well. So you CAN do lagers with dry yeast now! And it performs very, very well. Just use 2 packets to get the proper pitching rate for a lager.