This is a debate that has been discussed quite a bit in the blog world. Treehugger has recently published another article on this topic and discovered that it is possible to be just as efficient with hand washing as it is using a dishwasher, but you have to try.
Unfortunately for me, this isn't an argument I need to pay attention to. We don't have a dishwasher. And even if we had the available cash to buy one and make a space for it with hookups in our kitchen, there really isn't a practical place to put one in our kitchen, or anywhere in our house. This picture is a mountain of clean dishes from one Sunday.
We have a smaller house. It fills our needs completely, but it is almost 150 years old, and back then farm housed weren't built for our modern conveniences. Our bathrooms are tiny and afterthoughts. The closets are built into rooms or are a result of adding in the bathrooms. And our kitchen is very nice and plenty big enough for us, but has one wall of cabinets/appliances and countertops and our table is on the other wall. No dining room, just our eat-in kitchen. And that's fine for us. But it means that if we want to put in a dishwasher, the only available place is between the sink and refrigerator, where the only full-size under cabinet storage is. All of my pots, pans and mixing bowls will be displaced, not to mention our George Foreman grill, coffee maker and our strainers.
So, I hand was everything. It isn't so bad with just the two of us. But looking to the future, it could become more of a burden as our family grows. And when we have guests (which is at least once a week), the dirty dishes take over the counter space and dish washing must be a combined effort. I make efforts to use as little water as possible and I use an environmentally friendly dish soap, in very small quantities.