MVP Todd Klindt has given me permission to use his text from a newsgroup posting.
stsadm backups allow for more granular restores. You can restore at the site collection or web level.
2. SQL backups
With SQL backups you're always restoring at the content database level. That means it takes longer, as there's more to restore and then you either need a separate environment to prune out what you want, or you have to overwrite everything from that content database.
3. Which alternative scales better?
SQL backups scale much better than STSADM backups. Once you get over a couple of hundred GB, you'll find STSADM backups just take too long to make. Also SQL backups are much better for disaster recovery.