This is a debate that often erupts in Visual Anthropology class. Usually subtitles win out. But here is an interesting article from Japan Today that brings up some problematic (and unfortunate) issues regarding subtitles.
More recently, however, film distributors have become increasingly aware that younger audiences are unable to comprehend subtitles on current films. To simplify things, subtitle producers have been ordered to reduce the number of words flashed on the screen to the bare minimum, and use of Chinese characters has been cut.
But the comprehension problem may also be indicative of the dumbing down of the nation. Young adult moviegoers’ lack of familiarity with many basic historical facts, says the Sankei, in some cases has not progressed beyond middle-school level.
As a result, distributors are rapidly switching over to voice dubbing—not only for animated cartoons, but also for conventional cinema.
Link to 'What are Nazis?' Today's kids can't handle movie subtitles at Japan Today: