I think only you can answer this question.
Some find monthly payments to be more convenient, but DreamHost has a $49.95 once only set-up fee for monthly plans. Although you can cover this by taking advantage of one of the many promo-code discounts available.
Paying for two years in advance is definitely the most cost effective way, but it does mean having a largish initial outlay.
As I said above, this question can really only be answered by yourself, choose the method that you are the most comfortable with and that best suits your particular circumstances.
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