Here is an article about the latest research.
http://www.scientificamerican.com/blog/post.cfm?id=elective-cesarean-sections-are-too-2010-01-11Caesarians, contrary to popular opinion, are much more dangerous to both mother and baby unless it is an extreme situation. Obstetricians are more likely to recommend caesarians because of the threat of litigation. If an obstetrician allows a mother to birth naturally and something happens they are more likely to be sued than if they perform a caesarian and something happens because it is deemed that they "did everything in their power" to avoid injury or death by operating. So even though caesarians are more dangerous and have more long term ramifications to both mother and baby they are performed routinely when not medically indicated. If a mother or baby is injured or dies as a direct result of a caesarian that has been performed correctly it is considered a tragedy but the reason for the caesarian is not questioned.
There are also ramifications on bonding and breastfeeding with caesarians. Surgical delivery sidesteps the natural process and both mother and baby miss out on important surges of hormones that aid in bonding and breastfeeding. The rate of PND in mothers who have had caesarians and their disconnect from their babies can have devastating long term effects on both of them, not to mention the flow on effects to fathers and other siblings.
Vaginal birth with the use of instruments such as forceps or vacuum extraction is much more risky for both mother and baby. The use of instruments is often required because a mother has an epidural and her ability to birth her baby naturally is impeded. Often even in cases where a baby appears to be stuck a mother can change positions and thus change the position of the baby. Unfortunately positioning is not something most obstetricians know although many midwives may (this is not a given though since often they have been unable to gain these skills since it is rare that birthing mothers are allowed the freedom to try this before obstetricians intervene). In a hospital environment the midwives must do as the obstetricians say and if a surgeon is in charge of your care then it is fairly certain that you will end up in surgery because that is their field of expertise.
Despite WHO recommendations that trained midwives should be our primary carers in pregnancy and birth the reality for most of the industrialized world is that the medical profession is in charge and we are in most cases forced to conform to the medical model of care.
There are huge problems with how we birth our babies and this is a hard topic because there are so many variables that no two mothers and babies will have the same experience. My only advice is to question and research everything about your particular set of circumstances, if it is at all possible have a trained midwife as your primary care provider and trust your instincts in birth because they are there for a reason.