The fact that you can step through the code in your IDE more easily is really the only advantage to your post-processing solution. Doing the logic in the database server reduces the sizes of result sets, often drastically, which leads to less network traffic. It also allows the query optimizer to get a much better picture of what you really want done, again often allowing better performance.
Therefore I would nearly always recommend SQL logic. If you treat a database as a mere dumb store, it will return the favor by behaving dumb, and depending on the situation, that can absolutely kill your performance - if not today, possibly next year when things have taken off...
