You'll get the best performance by re-wiring everything. The old single wire setup used the metal of the case/fender/frame as a wire. You need a path (circuit = circus = circle) for the current to flow all the way from the dynamo to the light and back again. The frame by itself would be fine but the problem is all the connections between light and fender, fender and frame, etc can become loose or corroded over time and this will impede the flow of the current to your light. If you just add two wires all the way from the dynamo to the light you can insure you will always have a good current path and you'll get better light output.
Now that I think about it a bit, you also need to consider how to dis-connect the case from the second wire if you go with a two wire setup. You could either open the light case and try to isolate both sides of the bulb from the case (one side will already be connected to the single wire) or you could just connect the wire to the case. It would probably be easier to just crimp some sort of ring terminal onto the second wire and then connect that to a bolt that holds the light. Do try to get a good connection here and you might even want to seal it up with some type of liquid electrical tape or similar to keep it clean.
If you connect the second wire to the case be sure to read the instructions of your dynamo to see if it tells you which terminal to use for this purpose. It will probably be the ground or - (minus) connector. It might also be marked with a ground symbol of some sort (3 horizontal bars, etc).
Last edited by Iowegian; 09-01-11 at 05:00 PM.
Reason: more thoughts