Using dynamic-update or dynamic-insert has positive, though generally slight only on performance, as also mentioned by http://www.mkyong.com/hibernate/hibernate-dynamic-upda
I think many indices also slow down updates and inserts, so, beside large columns, dynamic-update should be good for tables with great width/content per row and many indices. You know, in "real life", databases aren't always with small, normalized tables...
Rebuilding indices on large tables may take much longer than the overhead for creating and parsing SQL queries.