There are big pros and cons for both, and in my opinion it depends whether those pros and cons suit you.
We use a CM. We chose a CM mainly because we need a degree of flexibility that a nursery can't always provide because of the small potential for everything going tit's up and me and DP being stuck 30 miles away
Also DP is an emergency services worker so he's not always able to pick up when he should be. Our CM is very flexible, fear cost-effective for us, doesn't mind our weird hours, and I'm more comfortable knowing that if the train line breaks and everything goes horribly wrong, DD is in a house where she will be given dinner, a bath and put to bed, not the only child in a nursery. That disaster hasn't happened yet but I feel better knowing it won't be the end of the world.
I've nothing against nurseries though and I'm really keen for DD to start nursery/pre-school as well as the CM when she's a little older. I think it's really important for kids to learn to be in big groups and have more structure etc.
However, for really little ones I think a CM can feel a lot more personal and homely. Our CM has about 5 little ones within a year in age (her husband is now her assistant) and they are such good friends, they're a little band who look out for each other at playgroups and get very protective, it's quite sweet. They do loads of playgroups and classes and get out and about, but also are in a nice home environment a lot. Our CM seems to find it easier to let the children do what they want - for example, DD loves being outside and the layout of the house means she can be outside, in clear view of the patio window, while the others play inside if they want to.
The big con with CM's is the illness and holiday, though I don't think that's ever as bad as people imagine it might be. Our CM takes maybe 3 weeks holiday a year, and we know about it months in advance. It's not a problem because we just take our own holiday then (say that week over Christmas), though we are fortunate that if it is a little bit awkward for a day or so DD can stay at grandparents for a few days. So I guess that was part of our decision. We've had 2 illness/emergency days but those were very special circumstances, and both times DD was able to go to another CM's for the day, one she knew because they all went to playgroups etc together. A lot of CM's have this sort of arrangement for emergencies.
But the only thing that matters is your gut feeling. Go and see a few nurseries, go and meet and few CMs. I guarantee you you'll have a gut feeling about one or the other!