configuring dhcp for a VLAN setup

how does one go about configuring dhcp to a network(about 600+ nodes)with about 10 vlans?..do we setup a separate DHCP server and connect it to the layer 3 switch or configure it on the router itself..what are the parameters to consider and how significantly does dhcp enhance performance over static allocation of ips..as in is DHCP the only alternative to static allocation..