[Disclaimer: I am not a rabbi, nor do I play one on TV.]
Jewish tradition records that we received at Mount Sinai two interdependent codes of law: the Written Torah (or simply the Torah, i.e. the Five Books of Moses) and the Oral Torah (Torah sh-ba'al peh, the core of what would become the Talmud). On the one hand, we were commanded to transmit the Written Torah according to precise scribal rules which could not be deviated from; on the other hand, we were originally forbidden to transcribe the Oral Torah at all. Scholars were allowed to make their own study notes, but not to pass them on. The Oral Torah could only be passed on by word of mouth. The Talmud was only redacted when there was a danger that the Oral Torah would be lost entirely, thanks to the Romans hunting down and executing the musmakhim (members of the High Court).
When one reads the Torah, one is struck by its subtlety as an educational tool; not only does it describe the process by which the Children of Israel first were taught the law, but simply reading about that process teaches us the law as well, in a multitude of ways. At its heart, the philosophy of the Torah is that by mandating a set of behaviors (many of which are highly symbolic), the human soul is taught virtues and principles that ultimately extend beyond the limits of the law to infuse all of life.
The Torah is the immutable word of God. (Indeed, some mystical traditions believe that the text of the Torah is a representation of God's essence, perhaps in the manner that a two-dimensional pencil sketch can suggest a fully formed being.) That word is meant to permeate our beings and purify our souls. But it is important to realize that in many ways, the medium is the message.
That the Torah is written is a deep lesson all by itself. It is an implicit command that we as a people learn to read, and learn poetry and music (embedded in the text are often subtle poetic forms that escape the reader who is not looking for them). It forces us to check our understanding against an unchanging source, and not to stray from it over time. It is a physical embodiment of the tradition and the Covenant, focusing our attention in ways that an abstract concept cannot.
Yet if that is so, then what is the intrinsic meaning of an oral tradition? And why must we have both a written and oral law? Many cultures have had oral traditions, and more modern cultures rigorously record their histories and legal systems. What is the purpose of mandating both methods of propogation, and why forbid that the Oral Torah ever be written down?
[At this point, I'm more or less taking a shot in the dark. See disclaimer.]
First, the obvious difference. A written work is unchanging, assuming accurate transcribing; but oral traditions are notoriously prone to evolve. To accurately transmit an oral tradition requires tremendous dedication and study on the part of the scholar, and even then there is a constant danger that material will be lost. Several times the Talmud records the lament of rabbis who were unable to learn all that their teachers knew, and were unable to teach all they knew to their students.
This sharpens the question. If you want the material to be propogated, why prohibit written records? And if you already have a body of written material, why entrust additional material to such an unreliable mechanism? What is being accomplished here?
I can only assume that such gradual evolution of the Oral Law is not a bug, but a feature.
The Written Torah is primarily a pedagogic tool, not a self-contained legal system. It contains only the broadest strokes of the civil law, enough to convey the underlying principles that it is built from, and to set specific anchor points that cannot be deviated from, yet not enough to stand on its own as a comprehensive source for legal rulings. The minutia of the law are found in the Oral Torah.
What effect would this have? While the fundamental principles of the Law would remain absolute, the practical aspect of the law would have a relationship with the evolving society which, although certainly not "dynamic" in the usual sense, is at least not rigid. Oral traditions are quite powerful and capable of resisting change when such change is anathema to the whole; yet on minor points, oral traditions are often quite pragmatic. This allows the law as a whole to remain vital.
The Talmud was written as a series of freewheeling debates, preserving the opinions of scholars who were later outvoted and organized around the idea that "These and these are the words of the Living God" — in short, that there are many valid forms for the law to take. This gave rabbis in later generations a degree of freedom in applying the law to their own situations; in extremis, one could rely on a minority opinion if necessary. In this way the organic character of the Oral Law was at least partially preserved.
But later works such as the Shulkhan Arukh ("Prepared Table" by R' Yosef Karo) were written as authoritative reference books, laying out the law as a series of definitive statements. When differences of opinion are recorded, it is only so that scholars can seek to satisfy both opinions at once. This made the Oral Law largely static; it became much harder to adapt to the needs of the day without being called a backslider by a horde of lesser figures frenziedly waving legal codes. The vitality of the law became endangered. And that has led to all sorts of problems today.
This is not to say that we must bend whichever way the wind blows. The Written Torah is still supreme, and the Oral Torah is still authoritative. Traditions should evolve, not be forcibly crossbred. Yet today, for many people, the Oral Law is encased in amber — to such a degree that it often eclipses the Torah itself in importance, in reality if not in theory. To let ourselves fall into this trap is to disregard the meaning of an oral tradition.
What is there to do? I don't know. It is incredibly dangerous for individuals to begin passing judgement on the modern Jewish Law, despite its flaws. That way lies the void. But we who love the Torah should at least begin the discussion, on our terms. We have for too long allowed criticism of the Law to be monopolized by those who disdain the Law in the first place, nullifying such criticism's value. Now, we must stand up again.