Matt Cutts says Google like both HTML sitemap and XML sitemap, but if you can only do one, choose HTML sitemap. Listen to what he has to say about that in the video or skip to the transcript if you are in a hurry:
Transcript of the video in case you have no time to listen to the whole video:
Raj, India: HTML sitemap versus XML Sitemap. Which one is yummy for Google search engine spider?
Matt Cutts: They are both yummy. It's like delicious apples and wonderful oranges. We (Google) really, really like them both. With XML sitemaps, we don't guarantee that we'll crawl the pages from those, but they can help us to discover new pages. HTML sitemap can definitely help us. So you have a link to your root page and then if you have an HTML sitemap, we can, by crawling those links, find the rest of the pages on your site. In addition, users like it because sometimes they want to find out what's all the stuff going on in your site and they want to say, "Oh, you know what? I just want to skip right to this portion. Help me find out where this part of the site is."
So if you could only implement one, somebody had a gun to your head and they were like, "You could only do one type of sitemap." I'd start with HTML because that's really useful for both users and search engines. But if you have time and it's really not hard because the XML sitemap can be as simple as one URL per line in a text file, which is not that hard to generate. If you can, it's nice to do both.
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