Milkshape is wonderful and works great. Anybody that bashes Milkshape is only because they don't understand it. I use blender as well and I know that it is not going to be incredibly helpful in the way of making add-ons, at least not a significant improvement from Milkshape.
In my opinion, the programs are equal. Blender is more confusing, but the fact that it uses quads makes it rather easier to work with.
Simply, you should use Blender because it is free.
However, I would say that since Milkshape hasn't been updated or even thought about for 4 years, it is abondonware. What I'm trying to say here is that the official Milkshape website hasn't been updated since 2009 and as such should be considered abandoned, so any copyright is no longer valid. This means, in my opinion, and hopefully Badspot's opinion. It should be okay to get Milkshape via keygen. (I didn't, I bought it for myself, but I still believe that Milkshape is no longer being updated or acknowledged by it's developers.)
I believe that Milkshape is better for making Blockland things, because the process for exporting something like vehicles is much easier in Milkshape.
Edit: Most importantly, it is the modeler that makes the good models, not the program.