hardware pro's:
re-sell value
"better" sound
the keybed responds better to your playing (velocity/aftertouch)
not having to turn your computer on to compose a beat.
hardware cons:
price
size (only if you have limited space)
software pros:
price
ease of tweaking
huge amount of presets (not necessarily good ones though)
software cons:
that "thin" sound
n almost no re-sell value
having to work on a computer
That's just my opinion, personally after owning a keyboard (korg TR) and some VSTs, I'll probably never buy software again. Its just so much easier to work on a keyboard, but I will say that it is harder to manipulate what you played, I mean nothing beats a piano roll editor, but with new synths, you can have something similar. I would say to anyone who soley uses VSTs and thinks their music could improve, buy a hardware synth and see if that doesn't change something.
As far as quality goes, when I used VSTs, I had to mix them from decent to good, now I mix them from good to great. Ya feel me?