I have the newer Shimano dynohub. It's held up fine for a couple of winters on my all-weather bike. The drag is hardly noticeable -- there's just a bit of vibration at high speeds.

I haven't used a Schmidt. I'm sure they're quite nice if you can afford them, but the Shimano is fine for normal use.

If light output is a concern, I'm pretty sure you can run dual headlights with either hub.