Chronological vs Functional Resumes

I hear conflicting views: do employers largely prefer chronological resumes? Don't functional resumes provide a clearer picture if not all previous jobs are relevant?

And... must my resume be specifically targeted to the job I'm after, or can I use a generic resume?

A lot depends on what type job you're applying for. If the employer will train you, a generic resume should be fine. If they are depending on skills you bring to the job, a specific and targeted resume will improve your chances.

I would account for all of the time but limit the details if the job isn't relevant to the one you're applying for. Vacant periods could imply there is something about the missing period you want to hide (like being in prison for going postal at your last job :-).

As far as what employers prefer, that's hard to tell. Most use resumes as a screening device to choose who gets an interview. A good specific resume gives them more information and says you care enough about the job to put some effort into it.