I have a customer table with Cust_Id, Name, City and search is based upon any or all of the above three.

Which one Should I go for ?

1. Dynamic SQL:

   declare @str varchar(1000)
   set @str = 'Select [Sno],[Cust_Id],[Name],[City],[Country],[State] 
               from Customer where 1 = 1'
   if (@Cust_Id != '')
       set @str = @str + ' and Cust_Id    =  ''' + @Cust_Id + ''''
   if (@Name != '')
       set @str = @str + ' and Name like ''' + @Name + '%'''
   if (@City  != '')
       set @str = @str + ' and City like ''' + @City + '%'''
   exec (@str)
   

2. Simple query:

   select
       [Sno],[Cust_Id],[Name],[City],[Country],[State]
   from
       Customer
   where
       (@Cust_Id  = '' or Cust_Id    =  @Cust_Id) and
       (@Name     = '' or Name     like @Name + '%') and
       (@City     = '' or City     like @City + '%')
   

Which one should I prefer (1 or 2) and what are advantages?

After going through everyone's suggestion , here is what i finally got.

  DECLARE @str NVARCHAR(1000)
  DECLARE @ParametersDefinition NVARCHAR(500)
  SET @ParametersDefinition = N'@InnerCust_Id varchar(10),
                              @InnerName varchar(30),@InnerCity varchar(30)'


 SET @str = 'Select [Sno],[Cust_Id],[Name],[City],[Country],[State]
                                          from Customer where 1 = 1'

 IF(@Cust_Id != '')
    SET @str = @str + ' and Cust_Id = @InnerCust_Id'
 IF(@Name != '')
    SET @str = @str + ' and Name like @InnerName'
 IF(@City  != '')
    SET @str = @str + ' and City like @InnerCity'


-- ADD the % symbol for search based upon the LIKE keyword
SELECT  @Name = @Name + '%', @City = @City+ '%'

EXEC sp_executesql @str, @ParametersDefinition,
                      @InnerCust_Id = @Cust_Id,
                      @InnerName    = @Name,
                      @InnerCity    = @City;

References : http://blogs.lessthandot.com/index.php/DataMgmt/DataDesign/changing-exec-to-sp_executesql-doesn-t-p

http://msdn.microsoft.com/en-us/library/ms175170.aspx