Hmm... yeah, in theory I prefer the format of the distance course, but I find they're a lot more rigorous and sometimes more tedious. A lot of courses demand you participate in online discussion forums for marks - in some courses this is a great thing - you can get a really engaged online forum where people engage in dialogue, but in other courses (especially ones where the instructor mandates students prepare a lengthy "response") you just get people posting lengthy comments that no one cares to read or respond to. It's not always the courses you think that will be enjoyable - I loved the course I took in ecology (which is not normally an interesting subject for me) because there were short, critical thinking assignments and a stimulating discussion on the class forum, but I hated intro marketing (which could've been a really interesting course) because there was no class engagement.
Plus, with distance courses you miss out on the informal comments that teachers give - the humor, snarky comments, incidents they might describe. Psychology courses are particularly dry by distance compared to in-class. I imagine that's why you don't see many english lit courses, even though the technology should be well suited to it - because it's hard to break down a book in a set of organized course notes.
Some reputable schools give you the option to complete part or all of your degree by distance even though they also offer on-campus options. This route is probably better than an all-distance school like Phoenix, which might have a bit of stigma.
Distance courses also demand you to be highly organized in your studies. Without a set timeslot for class it's a lot harder to keep on top of things. If you're not an organized person that can be a major drawback. If you're highly self-directed, however, you may appreciate being able to go at your own pace.