The pros of a data warehouse include the fact that the database is tuned specifically for the retrieval of historical data, slicing and dicing based on date ranges, part numbers or geographical regions, etc. It's tuned specifically for these queries so they better run fast! It's possible that your transactional database doesn't even have the historical data required to generate the reports you require.
The cons may be the potential size. These databases can be extremely large, which may require a significant hardware investment. Also, if your current expertise is more geared towards transactional systems, you'll either have to invest in data warehouse training or bring in external resources.
I'd recommend that you look into books by Ralph Kimball. He is the modern day guru and has some great offerings such as The Data Warehouse Toolkit: The Complete Guide to Dimensional Modeling (Second Edition), The Data Warehouse Lifecycle Toolkit : Expert Methods for Designing, Developing and Deploying Data Warehouses, and The Microsoft Data Warehouse Toolkit : With SQL Server 2005 and the Microsoft Business Intelligence Toolset.
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