XAML or C# code-behind
Creating an entire window in C# can be a mess of code. The best thing about WPF is that XAML allows you to separate your design from your logic, making for much easier-to-read code.
I'll use C# when I need to create dynamic controls, but I tend to keep my general design, static storyboards, styles, datatemplates, etc. in XAML.
Check out this video on MVVM in WPF. If you want wrap your head around how to organize a WPF application vis-a-vis what goes in XAML, code behind and other abstractions, this is a great place to start.
You can certainly go too far with XAML. Those who want their entire user interface (including logic, event handling relationships, etc) defined in XAML are probably missing the point.
The aim of XAML is to provide a common format for determining how things should look. It should just be a description of how to lay things out, how to color and style them visually.
There is really very little point in trying to use it as a replacement for other aspects of C#, because C# has a permanent head-start in terms of programming features - reuse (defining types and functions), referring to variables, procedural programming, and even declarative or functional styles.
Personally I really like throwing together a UI with a Linq expression!
The ultimate absurdity was reached by a sample I saw where they used workflow actions as the children of a button to supply the Click
handler, so the whole program was in XAML. It sounds "cool", but the problem was that it was significantly more ugly and unreadable than the equivalent C# or VB.NET program, and so everything that is ready to use in C# has to be replaced by a more verbose, flaky equivalent. Nothing has actually been gained by this translation to an uglier syntax - it's the same program only more hideous. XML is a poor basis for the syntax of a general programming language. Start with the fact that the greater-than symbol has to be written as >
!
In a parallel universe, Microsoft released C# 3.0 before they finished XAML. The XAML team adopted C# 3.0 object/list initializer syntax instead of XML as their syntax. And this whole debate never happened.