Even without the blemishes, I would be inclined to paint. It holds up better, and is easier to maintain. Color depth is important for decks and interiors. Too dark will heat up in the sun. White will cast glare into your eyes.

My favorite look is a well chosen paint scheme, with some accent pieces of varnished solid wood. Lots of varnish looks good on boats on dry land, but paint often looks better on the water.

In the end, of course, what looks best is highly personal.

Grant

I'm almost at the same point and wondering if anyone has varnished the exterior along with the interior. Results? Also, if painting exterior, what difference in maintenance different colors make.

  I painted most of the exterior of my Passagemaker white, varnishing the top  strake and transoms.  The first 4 strakes of the interior are painted green (the name of the boat is,after all, The Celtic C's), varnishing the rest of the interior (seats, top strake, transoms).

  Painting is much easier to apply - 2 coats versus 7 coats.  It wears better than varnish (scratches don't show much), and costs less (fewer coats).

  I also like the look of the contrast between paint and varnish:

It really isn't warped like it looks..it's just a bad camera angle. :-)