The game seems to be made for a combination of the two. Personally, I've found it very difficult to be consistently one or the other. You do NOT get XP for killing enemies, so look for ways to avoid combat altogether, or at least to shorten it.
To get the Downloadable Content (install these before starting a new game): Mass Effect 2 Downloads, Hints & Cheats Nightsolo's Mass Effect 2 Downloads, Hints, & Cheats