How to decide between Activity or Heartbeat (or DIY Rules?)
I am developing an SNS site and I chose Heartbeat.  I would choose Heartbeat again today for the following reasons:


Heartbeat has a stable D7 release.  Activity hasn't had any commits in 32 weeks (as of March 24, 2012) and is still in dev; there is no stable release yet.
Acquia chose Heartbeat over Activity for Drupal Gardens.
Heartbeat has rules integration.  This makes it very easy to customize to do what you want it to do, especially because you get access to tokens through the token module.  Activity lacks rules support.
Heartbeat has solid internationalization support.  This was a requirement as my site is multilingual.