DataSet or DataReader ?

The data reader is more useful when you need to work with large number of tables, database in non-uniform pattern and you need not execute the large no. of queries on few particular table.
When you need to work on fewer no. of tables and most of the time you need to execute queries on these fewer tables, you should go for the dataset.
It also depends on the nature of application. If multiple users are using the database and the database needs to be updated every time, you must not use the dataset. For this, .Net provides the connection oriented architecture. But in the scenarios where instant update of database is not required, dataset provides optimal performance by making the changes locally and connecting to database later to update a whole batch of data. This also reduces the network bandwidth if the database is accessed through network.
Disconnected data access is suited most to read only services. On the down side, disconnected data access architecture is not designed to be used in the networked environment where multiple users are updating data simultaneously and each of them needs to be aware of current state of database at any time (e.g., Airline Reservation System).