"To my understanding o-ringing the block or the head prove to be about equally effective. That said I would say it depends if you want to have receiver grooves machined. The most conventional method is to machine and o-ring the block, then machine receiver grooves opposite the o-rings in the heads. I guess it can probably be done in reverse fashion as well.
As far as the receiver grooves are concerned, it not only helps in high compression and or boosted applications, but helps wet motors from losing fluid which is a common problem with copper head gaskets. It allows the o-ring to literally push the gasket into the receiver groove to provide a better seal. Speaking of copper gaskets here is a bit of info from SCE regarding this stuff;
O-ring grooves may be cut in either the block or cylinder head. When using copper head gaskets thinner than .050, O-ring height should be no more than 25% of gasket thickness. For instance, the proper dimensions for an .043 thick gasket using .041 wire would be; a .038 to .040 groove width (provides a .001 interference fit), and a .032 groove depth (leaves .008-.010 of the wire protruding above the deck). This machining can be done at most high performance machine shops.
When receiver grooves are necessary, alignment of O-ring and receiver groove is critical, as is the depth and width of the receiver groove. Generally receiver groove depth should be 75% of the O-ring protrusion and the receiver groove should be 1.5 times the wire width. Example: If the O-ring is .041 wide and .015 above the deck; receiver groove should be .012 deep and .060 wide.
While the machining of O-ring and receiver grooves must be done by a machinist, the installation of the O-ring wire can be done by anyone, using common hand tools. When tapping O-ring wire into the groove, use care to avoid denting the wire. SCE provides an O-ring installation kit, (SCE PART #31542) which includes instructions, an installation tool and O-ring wire. When cutting stainless O-ring wire, file the ends square to provide the tightest possible seal."
Source: NASIOC Forums