This is a question I hear a lot, and an honest answer it is going to depend from circumstance to circumstance, but in most cases I would tell you whatever is going on in your life that is a "true" hardship is an event and not a condition.  It will pass, and once it does you will want to get back in the real estate game.  Doing a short sale will give you a better chance of doing that and doing it faster!

A short sale will have some negative effect on your credit, BUT NOT NEARLY as much as an actual foreclosure.  Remember a foreclosure is a matter of public record that cannot be removed with credit repair etc... It will show up the next time you go to purchase.  If not on your credit report on your title search.  If you are applying for a new home loan that is going to hold a lot of weight on whether you get a loan at all not to mention the rate and terms!

The short sale will show, but it also shows the new lender you are applying for your home loan with your attempt to make good on a bad situation, your responsibility, and hopefully it was just a snapshot in time. This is explainable and may require extra effort, but can get you into your new home purchase with much more favorable rate and term than if you just "walk away" from your current obligation.