I use .html and name my main product pages so they are located in the root directory. It may no longer be true but in the past I always heard that Google put more weight on pages the closer to the root they were.
mysite.com/product-1.html
mysite.com/product-2.html
My brother-in-law uses pages as folders and I always thought I may have a slight advantage over sites doing this as maybe they were looked at as being pushed down a directory. I don't know if there is any validity to this or not.
mysite.com/product-1/
mysite.com/product-2/
What I can say based on my ranking improvement is that I'm sticking with my game plan.
These are just my thoughts and I very much welcome other viewpoints!
Paul