I'm going to echo Michael here when he advises to consider what your own goals and priorities are first - and let the tax and other issues work themselves out.

There are a number of issues to consider since each family has a different set of circumstances from available income and savings to state tax rates to your child's potential/interest for higher education. I think our gurus have given you some great thinking points in terms of where to get started...

I would add, on a personal level, that I was responsible for financing my entire college education because my parents were not able to save for college and retirement. Now that I am paying off loans, I'm not ecstatic about having to write a check each month but I am glad that my parents are able to meet their needs in retirement. Again, it goes back to what works for you. Don't make a decision based solely on dollars - think about the bigger picture and what your options are likely to be in 15 or 25 years.

There's a similar thread on FiLife here that might be useful.

Good luck!