Layer2 or 3 switching?

It all depends on many factors

How many users ?
Any demanding periferals (colour copiers or network scanners) ?
Are you using any time critical services (VoIP) ?
Are you 10 or 100 or 1000 Mbps ?
Are your servers running gigabit
How many servers do you have ?

You probably get the picture by now.

If it were a simple network of say 80 users, all on a single IP subnet, then layer 2 switches (as lonf as you have a strong and fat backbone) are fine.

I only tend to use layer 3 if routing or prioritisation of packets is required.

I had a job a few years ago linking two building togeher - they were 2 miles apart. I installed three 802.11b wireless connections all plumbed into layer 3 switches, these fanned out to layer 2 switches for each floor and in some cases each dept at either building. VLAN's were used to separate the networks, and then port trunking used to get the best bandwidth out of the W-WAN connections. The added bonus was that if a wireless link failed - the network carried on.

The system worked extremely well - we even had voice over IP running on it extending the corporate switchboard from one site to the other.