The gotcha, and probably where your developer is coming from,
is to some extent this is dictated by where the help sits.
Security changes mean that CHMs are the most appropriate for
help sitting on a local PC and webhelp or flashhelp are most
appropriate for help sitting on a server.
CHMs can be made to work on a network, as described on my
site and webhelp and flashhelp can work locally but you might have
trouble with links to PDFs.
I suggest you liaise with your developer and do some testing
before you go too far.
On Office 2007 help Pete Lees posted something on that
recently.
Help others by clicking Correct Answer if the question is answered. Found the answer elsewhere? Share it here. "Upvote" is for useful posts.