The easy answer is, develop in what you have experience in. People who know .NET will be at ease working with WPF; people who know HTML/Flex/Flash will normally work more smoothly with AIR. Also people from a Java background tend to pick up AIR quickly because the AS3 is so similar to Java.
If you know both equally well (or equally poorly), it's probably best to decide on external factors. If being cross-platform is of value, then obviously WPF doesn't help you much. But on the flipside, if you plan to do windows-specific things (like hooking into DLLs or looking at the registry) then AIR is going to make your life very difficult.
Finally, if it would be useful to do "mashup" sorts of things, like reading in web content from external sites and working that into your interface, then generally speaking I find that sort of thing easier to do in AIR.