There are a ton of different factors to take into consideration when building a Flash website. At a basic level, Flash is simply one tool in a web developer's toolbox, and like any tool, it has things it's good at and things it isn't. You don't want to use a screwdriver to hammer nails -- similarly, you won't want to use Flash for every function.
Flash is excellent for animation, handling media (such as video, sound, and photos), and as a platform for rich internet applications. Flash is poor for projects text-heavy projects and for hardcore search engine optimization projects. Additionally, Flash adds another layer of complexity and customization to most Content Management System (CMS) projects because you need to not only program the CMS itself but then you need to build a custom Flash front end to display the content, so for most home-brew CMS-driven projects Flash will be too tough. Finally, ActionScript (the programming language which drives Flash) is a very robust language, but is complex enough to be outside the skills of most do-it-yourselfers.
All this is a very long anwer to your question, "Is it a good idea to create a totally Flash website?" Basically, it depends; if you have a media-heavy site or one that needs a ton of animation, then a totally-Flash site is fine. If your project does NOT have a ton of media or animation, or if maximum search engine optimization is crucial to your project, then I would recommend against an all-Flash site.
You mention that Flash sites have just one entry point. This doesn't have to be the case: if you build a Flash site using SWFAddress to manage the site navigation, then you can have any number of search engine friendly URLs be entry points to your website.
SWFAddress is also part of the method that I recommend to optimize your site for search engines. Basically, I recommend a five-step process for optimizing an all-Flash site:
1. Use SWFObject
If you’re not already using the latest version of SWFObject, you should be. Adobe has now announced that it is supporting SWFObject specifically. The beauty of SWFObject is that it allows you to serve Flash to people who can support it and (X)HTML to people who can’t. Also, search engine crawlers index the (X)HTML alternate content you serve, meaning that if you put your content in there, it will get indexed.
2. Create HTML pages for each of your flash pages
For each of your Flash pages (home, about us, contact us, etc.), create an HTML page that mirrors its content. That means all the text, all the links, all the pictures, etc. The HTML page doesn’t need to be pretty, but it should semantically reflect the importance of the content on your Flash page (that means have headings, have lists, have paragraphs, use proper links, etc. This will allow search engine crawlers to make proper sense of the content on the site. Also, if you want to make your Flash site mobile-friendly, then make these HTML pages pretty :D
3. Use SWFObject and multiple Flash files to hide the content
So you have all these pages, but you don’t want anyone who can support Flash to SEE them – only search engines. That’s where SWFObject comes in. On each of these HTML pages, you will use SWFObject to embed the same Flash file, but have the non-Flash content reflect the HTML you built.
4. Use SWFAddress and deep linking to direct Flash users to the proper content
Like SWFObject, if you’re not using SWFAddress, you probably should be. SWFAddress allows you to read information from the URL and then use that within your Flash. The most common reason for doing this is to be able to do deep linking in Flash. I will write some tutorials on how to use SWFAddress in the future, but for now you should download the example files and work through them. Using SWFAddress, you can use #anchors to define where in your Flash you want to go. So if you go to “www.mysite.com/index.html#aboutUs”, you can have SWFAddress load up your “About Us” section. The beauty of this is that search engines ignore #anchors so they won’t get confused and mess up indexing on your site.
5. Add a JavaScript call using SWFAddress to direct your Flash to the right section
At this point you’ve got multiple HTML pages and the ability to deep link in Flash. Now you need to direct users who come from a search engine to the right content within your Flash. All you need to do is call SWFAddress from JavaScript and update the page URL. Since your Flash is set up to use SWFAddress, it will read the update and take the user to the proper section.
I've written a blog post called "5 Steps for Building a SEO-Friendly Flash Site Using SWFObject and SWFAddress " which goes into this whole process in much more detail.
Good luck!
