Budget decision for small company

A small company had its website built in flash about 2 years ago. the website is pretty decent but does not attract a lot of traffic (go figure). He now wants to spend a couple grand on either 1. a redesign of his website in html/css optimized for search traffic; or 2. a google adwords campaign to bring in traffic to his flash site.

My first inclination is to tell him not to put the cart before the horse and that a well optimized website should be his first priority. However, I don't know much about keywork marketing programs like google adwords and whatever yahoo's equivalent is. Maybe this is a better option.

Which of the 2 options do you think I should reccommend to him?

I would recommend a redesign. Not only is the Flash site not Google friendly, but it's not accessible to the disabled, Lynx users, non-Flash folks, etc. A well designed site should also get indexed well, so you get two things for the one price. An ad campaign may drive traffic to his site, but it still won't be as accessible.