There are a lot of opinions, I'm sure, on which of these two you should do. I prefer both, but you will usually get a higher ROI with quality domains. I personally do both, physical real estate as a landlord and domaining (neither are full time though).
No matter which one(s) you choose to do, just remember that the money is made when you buy, not when you sell, though you collect the money when you sell. If you get a great deal on a quality piece of property (physical or virtual) at a great discounted price (or hand reg $7 price) you will make money. Now, with this economy, it is a great time to start looking for deals.