I think everybody would agree full game with ability to choose chapters is best, because this would allow us all to get our way.
If I had to choose, i'd say one large series. Because S&M pulled it off, but I think the story was a little different to the MI story. I can't really explain it, but the MI game as 1 big ep would feel pretty epic, and give a good chance for people to compare the feel to the other games (I think ToMI would benefit a lot from having the same format as CoMI etc.).
For me, the episodic way of playing it works fine when it's first being released. But if you watch a TV show on DVD, you don't expect the ad-break screens to still be in!
We'll drink beyond the boundaries of sense
We'll drink 'til we start to see lovely pink elephants
Inside our heads, inside our beds, inside the threads of our pyjama legs
So don't shoot 'til you see the reds of our eyes
And an army of elephants marching behind
From the day I was born 'til the night I will die
All my lovers will be pink and elephantine!