I have used the language text files approach, but I've stopped doing that since it turned out to be a bit messy. The people editing the language text files tended to stuff html into the strings ("This is an error message, so it should be red."). Also, when they wanted to add some text to the page they just put it in the template file, making the language file semi-obsolete.

Of course, if you are the only one who is going to be doing the editing, I guess you are not likely to run into the above problems, so go right ahead. :-)