If you can keep your document names (including the extensions!) the same this will be best for your transition. Here is why:
As you probably know, the best practice is to 301 redirect links to old documents to your new documents. This will transfer the link-passed strength of the old documents to the new documents.
Unfortunately the process is not instantaneous. Depending on the number of documents, how many document/folder layers, and the number and quality of external links, it can take up to several deep crawls to re-index your domain completely. That can take weeks.
After you update your web site, and before any crawling occurs your old pages still have 100% of your ranking strength and your new pages have zero ranking strength.
As Google bots attempt to crawl old (removed) pages and uncover your 301 redirects, the off-page strengths are transferred to the new pages.
As new content is crawled on-page ranking strengths are assigned.
So what does this mean to you? Here is an analogous demonstration:
While the search engines are crawling and indexing your content the ranking strength of your old content is transfered to the new content. During the transfer none of your content has the full ranking strength of your domain and incoming links behind it so your old pages will fall in the rankings and it will take time for your new pages to earn their place. Add in the potential for perceived duplicate content and a host of other issues during the transition period and you can understand why your rankings (and traffic) will tank until your website is fully re-crawled and indexed.
Obviously this simplifies the process quite a bit, but it does offer a solid, general understanding of what happens to your ranking strength when you redesign a web site and rename all of your content.
The more documents you keep with the same name the less water you have to pour.
[edited by: Komodo_Tale at 9:28 pm (utc) on Feb. 23, 2007]