I'll go for both! having a blog can increase traffic to our website and also it can increase our reputation and gain trust and loyalty of our consumers. Also, Google loves fresh updates and its the reason why it also love blogs.
I agree with James. Don't fix what ain't broke. Work on improving what you already have. If you have traffic and ranking for your pages then I would not move them.
btw. the main difference between a blog and a general website (imo) is that the blog has time-stamped posts and is eligible for inclusion in Blog directories and Blog Search. And the fact that the blog posts may appear to give up to date relevant news can give you an advantage in the short term over static pages (hence why there are specialist blog directories).
Many blogs are burdened with surplus code that doesn't help for SEO such as plugins, badly designed templates and credits inserted into the source code. So it doesn't make sense to say G loves blogs since every blog or website is different in some way. What G loves is content to create search traffic.
The way you have it, a site and then a blog as a sub domain is remarkable, i suggest you continue that way itself. There will be no need for a major change at this point of time.
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You could either keep them both separate, or you could merge the two. (RECOMMENDED BY ME)
The best solution is have both. Put the web log is a sub-folder like my site.com/blog. You get the best of both worlds as you have both a site & web log on the same domain. The web log is simple to update together with your thoughts. You will also get some SEO benefits with the fresh content & submitting to the web log directories and more.