Putting aside the SEO aspect of this question what about flexibility and the ability to grow.
Website Creators are fine if all you want is a simple website.
Also for an end user Website Creators are easier to work with.
But if you want the latest fancy new gizmo then you need to turn to a platform that has good third party support.
Third party support is where the action is and no one will support a closed system Website Builder as there is no money in it.
Applications like Joomla or Wordpress have tons of third party support which is why they are popular.
In fact the operating system you are using has tons of third party support and that's why it's popular.
Applications like Photoshop, Firefox or Open Office are all third party vendors supporting an operating system.
Without third party support even Windows would have few to no users.
Third party support brings to these mostly open source applications a wealth of tools and gadgets like no other.
No matter what you want to do there is most likely a third party add on that will do just what you wanted.
Applications such as flexible Image Sliders that can show Slides in many mind blowing fashions.
Or applications that can add full blown real estate functionality such as linking to Multiple Listings.
You can take Joomla or Wordpress and turn it into almost anything you please.
There are other Open source applications out there but the ones with the most third party support are king.
As for the down side of website builders we see many are free to use but have high monthly costs should you need support. ( Free has no support )
Email is another problem as it costs extra with some and one I seen helps you sign up with Gmail.
Domains maybe required to be registered or transferred to them.
Last your Website is not portable as you cannot pack up and move to another host or builder.
This is because your website really is not your website at all.
The website builder is one dynamic website which will look different for each of the millions of registered users.
Each of the millions of users have their design saved in a database which when called upon will render the design matching the domain used in its tables.
Other than any images you may have uploaded there are no files in such a system thus nothing that can be moved.