Heya Talisman,
That's my preference to as can be seen with my work on the Joomla 1.5 port at
time-to-train.com/
I think if scaling could be applied proportionally so no stretching was applied, and the right sort of image was used, then it could work ok. Some images, especially jpegs of organic/nature scenes can scale quite well.
Scaling is quite a bit of extra work for a feature most probably won't notice though.
I do like the way you can position your background image when using CSS centering, if done carefully areas of the background can be positioned in relation to the web page. I spent quite a while getting the sun rays to come out the side of the header ;-)