It all boils down to your business. The best person to talk to would be an accountant.
Being VAT registered will allow you to claim back any VAT paid, but as a result, you will have to charge your customers VAT.
If you're selling retail, being VAT registered will be of little benefit and I would advise registering only when you need to. If your selling wholesale, then not being VAT registered could hold you back in terms of who's willing to deal with you.
A few advantages of being a Limited Company:
http://www.taxtips.co.uk/content/Ltd-Advantages.htm
Being a Sole Trader, I really can't tell you much about Limited companies.