We're using the Cisco 1921/K9 with a SG300 L3 switch. Does one set up DHCP server on the router or on the SG300? If both is capable, what is the reason to choose one over the other?
Note: I have 4 VLANS set up on the SG300 L3 switch
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Since DHCP Discovery broadcasts initially and to avoid the need for ip-helper addresses, the L3 switch where your users or servers connect is generally the better spot for DHCP. You didn't mention multiple VLANs, and with the size equipment you have, I assumed just one, so you just need DHCP configured for that VLAN.
You could put the DHCP scope on your router if it's L2 adjacent to the users. If it isn't, then you need ip-helper config in your L3 switch VLAN to get the DHCP broadcasts sent unicast to the router (DHCP server).
Edit: With your update on topology and VLANs, I would still lean toward the L3 switch for the location of your DHCP scopes. With the router failing, no DHCP discovery or renewal could take place which could impact your internal-only traffic.
Ideally, you have multiple switches or DHCP servers so you can have distinct scopes on them -- not overlapping, each serving half of the addresses. On a 172.16.1.0/24 subnet, and skipping the first 4 addresses, one server could scope 172.16.1.4-127/24 and the other server 172.16.1.128-254/24. [172.16.1.1 reserved for your gateway addr with .2 and .3 reserved if you were running HSRP]
Given the topology you gave in your comment. The L3 switch is probably the best place to put the DHCP server. This also sets you up in event you add an additional WAN router and have two circuits or connections coming into the office there. This would eliminate the single-point-of failure if the DHCP server were to reside on one of the routers which "went away"
Otherwise you would need to utilize the ip helper-address on the VLAN interface.
It's a matter of one's preference really. In a flat network (one lan segment), it doesn't matter if the DHCP server is on the router, the switch, or a server. They will all see the same broadcast queries. I would recommend using the most stable ("available") platform that has an acceptable means of configuration.
I run DHCP on my cisco router at home -- single LAN. It's a central point to configure everything. And I'm fine with the cli to manage everything. (not that there's much to manage in my home network.)
At work, there's a DHCP server (windows 2000) on the main office LAN (where 99% of the workstations live) that answers for all 36 LAN segments via a dhcp-relay agent on the inside router. In this case, this is the optimal location for it as that's where almost all DHCP traffic exists. It's on a windows server because people like pointy-clicky interfaces. (read: easier for people who aren't me to deal with)
Set up the DHCP on the router's gateway interface or use 'ip helper' to direct requests to DHCP server. The more centralized your network, the easier it is to manage as it grows.