Hi 

I dot net 2.0 we have to type of Installation available to us. One is click once Installation and another old Windows Installer method. Both the methods have some advantages and disadvantages. Both the technologies are designed with different set of goals and are not a replacement for each other.

There are many compelling features in Click once deployments which are not present in the windows Installer. These features are specifically targeted at developers building .NET Framework-based smart client applications that don't have sophisticated configuration requirements. On the other hand Windows Installer is a much broader deployment technology that is inherently designed to be extensible and able to handle any deployment challenge, including .NET applications. 

Here is a quick look at the features and the availability in both deployment processes.

Install Files – Available in both the deployment process.

Create Shortcuts – Available in both the deployment process.

Associate File Extensions – Available in both the deployment process.

Install Services – Available only in windows Installer

Install to GAC – Available only in windows Installer

Manage ODBC – Available only in windows Installer

Manage COM+ – Available only in windows Installer

Write to Registry – Available only in windows Installer

Advertising – Available only in windows Installer

Self-Repair – Available only in windows Installer

File/Folder/Registry Permissions – Available only in windows Installer

Install-time User Interaction – Available only in windows Installer

Install for All Users – Available only in windows Installer

Custom Actions at Install/Uninstall – Available only in windows Installer

Installation Conditions/System Interrogation – Available only in windows Installer

Auto-Update and scheduling – Available only in click once installation.

Forced Updates – Available only in click once Installation.

Security Sandboxing – Available only in click once Installation.

Download/Install Assemblies on Demand – Available only in click once Installation.

Rollback to Previous Version – Available only in click once Installation. 

So while deploying you need to choose the right option depending upon the requirements that you have.

Hope this helps
Thanks
Vikram