I think you would like to have both. The airbag provides additional space for decelleration when you hit - which lowers the impact force. The armor distributes the impact load and reduces the chance for any puncture. You would think that running the airbag over traditional armor would be the ideal scenario.
Check out this guy:
I wish they would have run another 10 seconds of video to show the guy walking away!
My Impact Jacket material is very tough on its own and has "CE armor" (I'm sure there is a more technically accurate term) in the elbows and shoulders.
The inflation mechanism seems very simple and robust, but you still run the risk of forgetting to attach it. That's why I'm still working on a connection sensor. Other makers are working on accelerometer-based systems - but then you get electronics and batteries involved.
I suspect we'll see better systems hit the market at some point.
My Ford safety engineering friends would say that the ideal answer is a 2010 Taurus!