Can anyone tell me if I'm better taking usd or Mexican pesos ?
Pesos as this is the local currency and you will get a better rate - assuming you aren’t an American
Take and use Mxn pesos. Understand they they (Mexico) also use the '$' to denote their prices.
Check with your bank at home to see if they have any reciprocal agreements with any Mexican banks for lower or reduced fee ATM withdrawals. Try to use ATMs actually 'attached to a bank', and not free-standing. Those free-standing ATMs usually charge the highest fees and are more prone to being set-up for skimming / stealing your card info.
Also understand that if you do take and spend USD, they must be in good shape with NO tears and NO marks. US coins are worthless in Mexico. And also any business is free to set their own exchange rate, so it usually does not work out in your favor. However I disagree with Fiona B, using USD does not *always* give you a worse rate (price). I've actually done the math while shopping and sometimes paying in USD it is actually 'cheaper' to buy the item. Again the business owner is free to set their own exchange rate. Safe travels.