depends upon the amount of data to be archived and how frequently you want to access the data....
If the amount of data is small and frequently accessed the same can be archived to a separate tablespace on the same database.....
However if the amount of data is large a separate database is recommended because of the following reasons -
backups / restore can be done faster for main database
archives can be maintained in a separate drive, you save on disk space on your main machine
since the amount of data handled by your main database archival is less, subsequently your maintenance activities gets decreased
Helps in recovery of archival records if your main database fails [this applies only if you don't maintain periodic backups]
These are some of them.... maybe someone will add up on those