From what I've seen (at Vanguard), the ETFs generally seem to be better - lower expense ratios, and no penalties for selling. For example, VTI (vanguard total stock market etf) has expense ratio of .07%, while the index fund equivalent has a ratio of .18% if you have less than $10k in it. Also, if you sell from the fund, you can't add to it again for 3 months; the ETF doesn't have that restriction. Both the ETF and the fund are no-load if you get them with a vanguard account.
**That's important - whichever you choose, make sure there's no extra fee to buy or sell - that typically means buying Fidelity funds/etfs if your account is at fidelity.
You're probably right about having to buy whole shares at a time - if you want to dollar-cost-average with an automatic investment each month, the funds may be better for you, but you'll want to doube check and see what Fidelity allows.
For me, I would prefer using ETFs, but I'm stuck with the regular funds for now - Vanguard won't let me create a brokerage account because my employer is a publicly-traded company.
