I believe that WinRAR compresses a bit better, but WinZip has a much more usable interface and .zip files are much easier to share because of their ubiquity.
Also keep in mind that XP has a built in way to recognize .zip files, this is important if you are targetting casual users. If you distribute a .rar file, they many not know what to do with it.
New WinRar's archiving format is unsupported by older versions, so it seams “unfriendly” to some users, but Winrar has more parameters than Winzip, if pick up a right method, the final size of files should be better.