I ran across this link and thought I would share it with everyone. I recall a ways back when I was just coming up to speed with SharePoint 2007, I really couldn't figure out which is the "best practice", .dwp web part files or .webpart files. If you look in the web part gallery, you'll see a mix of both which made it even more difficult to figure it out. Over at DotNetMafia, Corey Roth was nice enough to write a post telling you what each one does, and how .webpart is the latest version and is the one you should be using.
Check out the post here