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We have done both. The train is a great experience (staged train robbery on the way back is fun for the kids), but it didn't give us enough time at the canyon. We ended driving up to the canyon again the next day from where we were staying in Flagstaff.
When you stay at Trailer Village, you can go to the rim any time you want - either drive over or take the bus that stops right in the village. We went to the rim several times to watch the sunset and to just sit on a bench and watch the shadows change in the canyon as the sun moved across the sky.
It's a tough choice; but if I had to pick, my choice would be Trailer Village.
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