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What is the difference between Static LAG and VLAN Trunking and which would be better to use going from Switch to Switch with CAT5 in a VLAN environment?

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The two technologies do not overlap. You may need both.

Static LAG also known as link aggregation or bonding allows you to combine the throughput of multiple ports connected between the two or more devices.

VLAN trunking allows traffic from multiple vlans to cross a single link.

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    I like this differentiation: LAG is merging many physical links in to one logical link. 802.1Q Tagging is merging many logical links in to one physical link. Aside: Unfortunately some platforms (Foundry) call LAG "trunking". So I always try to call it 802.1Q tagging instead of VLAN trunking. – Joel K Jul 2 '10 at 7:03

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