I have lived in FL essentially my whole life so my snow experience is slight at best.

Which is better for driving in the snow AWD or 4WD? Is a Denali AWD better than a 4WD Yukon?

In general, AWD is 4WD lite. AWD is usually an automatically-controlled system whereas 4WD is manually controlled at your desire.

AWD is for cars, 4WD is for trucks.

I don't know specifically on those two trucks but they're basically the same vehicle. It would seem to me they'd have the same driveline. Is one AWD and the other 4WD?

The awd system that I believe in that truck stays on all the time, giving traction on all slippery surfaces. It does what it's purpose is intended for, but is no 4wd, or has low gears for pulling, which might not be necessary for your application. I personally like the awd trucks.

Engine Options for all Yukon Denali Models Trim Level Horsepower Torque
(lb-ft.)
Yukon
Denali Yukon XL
Denali
Vortec 6.2L Variable Valve Timing V8 SFI 380 417

Mechanical Yukon
Denali Yukon XL
Denali
Alternator, 160 amps
Cooling, external transmission oil cooler, auxiliary, heavy duty air-to-oil
Differential, heavy duty locking rear
Engine block heater
Exhaust, aluminized stainless-steel muffler and tailpipe
StabiliTrak, stability control system with Traction Control
Transfer case, AWD, electronic automatic system
Transmission, 6-speed automatic, heavy duty, electronically controlled with overdrive, tow/haul mode, and tap up/tap down shifting

TransmissionFeatures Yukon
Denali Yukon XL
Denali
Rear axle, 3.42 ratio
Transfer case, AWD, electronic automatic system
Transmission, 6-speed automatic, heavy duty, electronically controlled with overdrive, tow/haul mode, and tap up/tap down shifting

SteeringTurning Diameter Yukon
Denali Yukon XL
Denali
Turning diameter, curb-to-curb, ft 39 43
Features Yukon
Denali Yukon XL
Denali
StabiliTrak, stability control system with Traction Control
Steering, power
Suspension, front, coil-over shock with stabilizer bar
Suspension, rear multilink with coil springs
Suspension package, Autoride, bi-state variable shock dampening and rear air-assisted load-leveling, includes automatic air level control
Transfer Case, AWD, electronic Autotrac system

It appears that the Yukon is manually activated whereas the Denail is automatic.... probably using wheel speed sensors to detect slip. They probably both have the same driveline. So if you're capable of just pressing a button when you need it, the Yukon is fine. But if you (or your wife) would rather have the computer decide when you need the transfer case engage, then the Denali is what you want.

This is from the GMC website:
Yukon- Transfer case, active, 2-speed with push-button controls (4WD models only)
Denali- Transfer case, AWD, electronic automatic system

I think the 4wd is better for the snow, although the awd may be better for ice. Its my understanding that awd does not turn all four tires. The awd is an automated system that will detect slippage in one tire and transfer the power to a front tire and/or opposite rear tire. Wheras in 4wd you can spin all 4 tires in the worst conditions.

I have both a 4WD Jeep Wrangler and an AWD Jeep Grand Cherokee. When going offroad, the Wrangler with true 4WD and low range is the only way to go. However, when it snows, the Wrangler stays in the garage and the AWD Grand Cherokee gets us around with no problems. We are on our 3rd AWD Grand and love them. Plus, with the wife driving I don't have to worry about her "forgetting" to put it in 4WD and going in a ditch or getting stuck.

The only downside is they can me more to maintain, since the front end is always pulling some you can wear out bearings and CV joints faster than a 4WD system. We seem to get about 60K miles out of the Grand before the front end needs some work but it is a small price to pay.

I agree on the AWD having higher maintenance costs and lower MPG. I just swapped the 249 (AWD) transfer case in my Grand for a 241HD (4wd). Almost direct swap. The AWD transfer case is much weaker than the 241 along with all the differences mentioned above. Drives much better all around - 2wd does "push" and 4wd seems to connect me to the road better. Wive's car? Then go AWD for sure!

My wife has had several Denali's and now has a suburban and I can tell no difference. The late model 4WD also has an auto option so you don't have to worry about it. We have also never had any problems with the AWD model as far as maintaince. And her new 5.3 suburban get worse mileage that the 6.o Denali, but only slightly. I would get which ever truck you like best and not worry, they are both great trucks.

All things being equal, I'd want the manual control and the low range for launch ramps.

The new GMs (GMC and Chevy) have 4WD full transfer case systems, with 2W-HI, 4W-HI and 4W-LO; as well as an AUTO-4 setting. As soon as slippage is detected, the front end starts to grab. The delay is noticeable, but minimal. This setup works well. The Escalades and Denalis are AWD all the time systems.

Ideally, you would use the setup:
Normal conditions: 2W-HI
Heavy rain and/or onset of winter conditions: Auto-4
Driving in snow: 4W-HI
Pulling someone out of a ditch: 4W-LOW
Driving on ice: STAY HOME All the tire turning capability in the world won't help you STOP. ABS is a great technology. It allows you to somewhat convince the vehicle to slide out of control into a different direction. That's about it.