I like REI for their large and varied inventory, not to mention that nice little dividend every year. But I also have noticed big differences among different REI stores. In comparison, once you've built a good relationship with an LBS, that's usually something that sticks. I was off my bike for most of last year, but the LBS folks remember me and still provide good service plus a few little perks since I've been doing business with them for so long--nothing huge, but enough to make me keep going back there (free bungees when I bought a car rack, a free tube when I bought two new tires, accepting a 15% deposit on a layaway bike instead of the 25% they usually require). Add that to the happy circumstance that they are at the trailhead of the local rail trail, and you can see why I wouldn't go anywhere else.

On the other hand, if you live near enough to a well-run REI store that is friendly and responsive to your needs, and that can become your LBS, that's great, too.