This has advantages and disadvantages, of course. On the pro side, the content is visible immediately. On the con side, the content is visible immediately. :-) Having every page be interpreted has definite performance implications and not just on the origin server. Unless care is taken, the dynamic nature of the page can result in it rarely or never being cached, which hits you in the system and the network. If you pay for your bandwidth by the byte, that can be a huge deal.
Like Sam, I use a mix of languages. For Web pages, I use PHP almost exclusively; for standalone apps I use C, PHP, bash, or Perl, as seems appropriate. In general I use Perl, but if I'm frobbing a database, chances are I'll use PHP unless there's something in CPAN that argues for Perl.
When I first got involved with blogging, in December 2002, I decided to write my own software from the ground up. In PHP. Of course, I'm a bit-twiddler, and did it that way so I'd understand what this 'blogging' thing was all about and how it worked. (Almost as soon as I brought it online, Sam challenged me to take the next step. :-) The result can be seen at my blog.
I hope to go into this subject in more detail in the future, and I definitely intend to say some things about how I'm using PHP to automatically guard my Web servers, but this is just an introductory note after all.