You're going to get a mixed opinion on this one. There are benefits to both methods. I generally dump text in blocks the way it was in the game. If the game has 20 text blocks, I have 20 script files etc. It's easier to debug and manage that way for me. Most of the time the translators don't have a preference, so I just go with that.
It also depends on your insertion method. If you've got something that can insert from one big file great, but if you don't, it may be easier to insert individual blocks. ALWAYS consider insertion when you're dumping. So many people end up with headaches later because they don't even think about insertion at that time. You need to dump the script in a way you're sure you will be able to get back in without problems.