What is better? Delete and insert or update?
There's a lot more to worry about with a DELETE/INSERT methodology. From the top of my head:


Transactions will need to be manually handled. An UPDATE is a single operation that is atomic. With DELETE/INSERT it's possible to have the delete succeed but the insert fail, in which case you have no data. You need to handle this manually and the engine handles the update automagically.
Foreign keys/references. If you use any data in that table or it's referred to elsewhere, the DELETE gets a lot more complicated, as does the INSERT with linking back to the correct record from the child table if you dropped the key.
Log file growth. Depending on your settings, the statement, and the table the 2 operation method could log more to the transaction log.
Indexes. It's a lot more expensive to D/I through indexes than to update. Could also lead to fragmentation in the indexes more quickly.