I have no strong preference either way on this issue, but I suspect that spacing the updates out is more useful.

One reason for this is that a lot of updates means that the story spends more time on the first page of ff.net's HP story list. The HP fandom is one of the most active ones and stories tend to get bumped off the first page quite fast. To that end, I also think it would be a good idea to occasionally update the story at some other time of the day than the usual 7 PM Pacific Time. Who knows, maybe that alone would bring in some readers who miss the story again and again for no other reason except that it's updated at an inconvenient time of day.

The communal aspect shouldn't be overlooked, either, and having time to discuss chapters is definitely a legitimate reason to draw out the process. This doesn't apply to everyone, of course; I gave myself five minutes to think of solutions for the end of chapter 80 and refrained from discussing them with anyone, and I doubt I'm the only one who plays the game that way.

IMO, the optimal update rate would be once per four or five days. Enough time for folks to talk things over if they wish, but not so long that the anticipation has the time to collapse.