In my opinion bigger is better- especially if it's good! Get your minds out of the gutter, people, I'm talking about book length! :)
According to a lot of editor and agent websites/blogs, shorter is the way to go. This is especially true if you are a new and previously unpublished writer. Publishing houses are being extra cautious these days, what with the economy and all. But, it appears that there have always been loose guidelines in what is an acceptable manuscript length. What once was a "loose" guideline is really tightening up in recent months.
Once you've become published and you can prove your worth (i.e., book sales), you can definitely loosen your guidelines up for length quite a bit. Some publishers may remain adamant that they want you to keep the novel length shorter, but that's what agents are for, right? Agents who are really passionate about your work, and who are good at what they do, will help to negotiate what is ultimately turned in for publication.
Like I said, I prefer books to be at least 500 pages if not longer. If they are good books I don't want them to end. More is better. Even if they are series books. That's just my personal preference. The book I am writing was originally planned to be at least 500 pages in length (which translates to approximately 130k words), but I've decided to taper that back a bit - maybe around 300-350 pages. It is a planned series, so I figure whatever I can't fit into this one I can certainly squeeze into the others. And once I'm published (positive thinking!) I can hopefully extend the length a little if necessary!