My problem with auto generated code is its lack of maintainability. If there is a small change in the database then you have to refresh the entire generated code section and make sure that only the intended change have gone in. And if you are not using any code repository which does not tell you the changes in the code then it is much more difficult to find the code changes. It also means that the entire component should be tested again fully for all scenarios.
Also, I have noticed that developers working on the legacy generated code sometimes make manual changes in the generated code instead of generating the auto generated code section again. After a period of time it becomes almost impossible to replace the auto generated code.
Code First of Entity Framework seems to me a much better option. The code change is localized to a certain file so less chances of breaking any existing functionality.
So in nutshell, if you have a very disciplined team who does not touch the generated sections and also diligently covers all the test scenarios using Unit Tests...then by all means you can go for generated code approach but try to have Code First approach as much as possible.