URL rewrites are good for translating set patterns, for example:
www.site.com/products.php?catagory=1&product=32&viewmode=2
to:
www.site.com/products/cat1/item32/2
But if you are using unknown folder structures or varying structures, then it will not be suitable unless you have numerous (and probably complex) rewrite rules.
Also, if you want all files to translate to site.com/file.php then you will need to make sure that every single file has a unique name.
ReWrites are best used for SEO, to the end user they make little difference.