The dry stuff will probably make a huge dust storm. I don't think that you can wash it enough.
I think that live sand is a joke - if the bacteria managed to stay alive in the bag for months and months, or longer, they will have cannibalized themselves to live in that ecosystem and will have to again establish in the different ecosystem of your tank. However, the "live" sand that is in water is very easy to add and has very little "dust," so I think that it is a good choice.