How about combining the two? You could have a touch-screen machine that would print out a paper ticket with the voter's choices so they could review it before putting it in the ballot box. Then you have a paper trail, no chads (hanging, pregnant, or otherwise), no ambiguously marked check-boxes, etc.
One of the problems with the machine paper receipt that shows how you vote is that it can be used to buy/coerce votes with the requirement that you show your "sponsor" the result of your vote to be paid or avoid punishment.
Programming a computer to record one thing and print another is embarrassingly easy.