London Tube Pass

Oyster, almost always.

I would get a one day pass each day. That way you don't worry about running out of credit.

Well this would be unsolicited advice so I won't offer it, but if there are 2 of you and the 2 for 1 offers from National Rail would save you money you might consider paper Travelcards from a National Rail station (if I did give the advice I would suggest scrolling around for lots of prior discussion about the topic) To answer the OP question - you will have to do the math based on your needs, locations, walking preference, and group size and content.

If you're going to ride the Tube a lot all five days, then a seven-day travelcard is cheaper than five one-day travelcards. You can load it on an Oyster card. If you're going to take the bus or walk on some days, then a pay-as-you-go Oyster card would be better. If you want to take advantage of National Rail's 2for1 offers, buy seven-day, zone 1-2 paper travelcards at a National Rail station. Or buy one-day, zone 1-2 paper travelcards for each day you plan to use a 2for1 offer and use PAYG Oyster cards for all other days. To see a list of offers and to print vouchers for the ones that interest you, go here.

The rules about Oyster Cards, Travel Cards, etc., might fill a small library. The upside is they're all pretty good deals. I use the Oyster when I visit because it's simple and I never take a bus or rail inside London.

The Oyster card is good for the tube and the bus. You can even purchase it at Heathrow if you plan to take the tube in. You can go to the counter & ask for help figuring out what is best for you. The good thing about the Oyster is whatever money you don't use up you can get a refund on. You can still buy a travel card for 1 day so you can take advantage of the 2 for 1 offers and you won't lose any money if you don't use your Oyster that day.

I would definitely do the Oyster card. If you hit the amount of a one day travel card, you won't be charged for any more that day. And you can always swipe it quickly at the station to see how much you have left. We estimated how much we had left and would check when we thought we might be getting low and we never ran out.