Tradeoffs when considering SPI or I2C

Summary
SPI is faster.
I2C is more complex and not as easy to use if your microcontroller doesn't have
an I2C controller.
I2C only requires 2 lines.
I2C is a bus system with bidirectional data on the SDA line. SPI is a point-to-p
oint connection
with data in and data out on separate lines (MOSI and MISO).
Essentially SPI consists of a pair of shift registers, where you clock data in t
o one shift register
while you clock data out of the other. Usually data is written in bytes by havin
g each time 8
clock pulses in succession, but that's not an SPI requirement. You can also have
word lengths
of 16 bit or even 13 bit, if you like. While in I2C synchronization is done by t
he start sequence in
SPI it's done by SS going high (SS is active low). You decide yourself after how
many clock
pulses this is. If you use 13 bit words the SS will latch the last clocked in bi
ts after 13 clock
pulses.
Since the bidirectional data is on two separate lines it's easy to interface.
SPI needs at least four lines: SCLK (serial clock), MOSI (Master Out Slave In),
MISO (Master
In Slave Out) and SS (Slave Select). In systems with more than one slave you nee
d a SS line for
each slave, so that for N slaves you have N + 3 lines. If you don't want that yo
u can
daisy-chain the slaves by connecting the MOSI signal of one slave to the MISO of
the next. This
will slow down communication since you have to cycle through all slaves' data.
Like tcrosley says SPI can operate at a much higher frequency than I2C.
I2C is a bit more complex. Since it's a bus you need a way to address devices. Y
our
communication starts with a unique start sequence: the data line (SDA) is pulled
low while the
clock (SCL) is high, for the rest of the communication data is only allowed to c
hange when the
clock is low. This start sequence synchronizes each communication.
Since the communication includes the addressing only two lines are required for
any number
of devices (up to 127).
edit
It's obvious that the data line is bidirectional, but it's worth noting that thi
s is also true for
the clock line. Slaves may stretch the clock to control bus speed. This makes I2
C less
convenient for level-shifting or buffering. (SPI lines are all unidirectional.)
After each byte (address or data) is sent the receiver has to acknowledge the re
ceipt by placing
an acknowledge pulse on SDA. If your microcontroller has an I2C interface this w
ill
automatically be taken care of. You can still bit-bang it if your microcontrolle
r doesn't support

it, but you'll have to switch the I/O pin from output to input for each acknowle
dge or read data,
unless you use an I/O pin for reading and one for writing.
At 400kHz standard I2C is much slower than SPI. There are high-speed I2C devices
which
operate at 1MHz, still much slower than 20MHz SPI.