here) compares the use of log-transformation to non-linear regression for analyzing power-laws.A new paper out in Ecology by Xiao and colleagues (in press,
They suggest that the error distribution should determine which method performs better. When your errors are additive, homoscedastic, and normally distributed, they propose using non-linear regression. When errors are multiplicative, heteroscedastic, and lognormally distributed, they suggest using linear regression on log-transformed data. The assumptions about these two methods are different, so cannot be correct for a single dataset.
They will provide their R code for their methods once they are up on Ecological Archives (they weren't up there by the time of this post).