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This is probably the most perennial and oft-repeated question that's directed to me, and it doesn't seem to matter if economic times are good (as they were two years ago) or bad (as they appear to be right now). The real answer to this question is "both:" employers want individuals with relevant, hands-on experience who can relate to on-the-job requirements, but they also want individuals who've been trained on current versions of systems, software, practices and procedures, who know the vendor's official take on such things. The same answer applies to another perennial question of this type, BTW -- namely: "Should I get certified, or get a degree?" That said, I've asked recruiters and employers point-blank: "If you were forced to choose between otherwise equal candidates, would you choose certification over experience, or experience over certification?" The unanimous-- and I mean everybody's -- answer is "experience." Thus, if you find yourself forced to choose between getting experience and getting certified, choose to gain experience. The way I look at it is that it will be easier to get certified later if you have experience, than it will be to get experience later, if you have a certification.
For more information on this topic, check out these resources:
Executive Security Briefing: Revisiting the security certification landscape
Best Web Links: Career Information
Dig Deeper on Information security certifications, training and jobs
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