For me, too much dialogue in books is the same as too much dialogue in movies. Explain what needs to be explained and keep the plot interesting, but don't just talk all the time. The story moves with action; not with talking, IMHO.
I think it depends on the genre, although I do like to see a balance between both elements. For example, fantasy novels rely heavily on narration to explain the setting, whereas police procedurals and other crime novels rely a lot more on dialogue. I enjoy both genres, and couldn't imagine a crime novel with pages of narrative descriptions or a fantasy novel that relied on dialogue.
I read a psychological thriller once that relied almost entirely on dialogue and it didn't work for me. I was lost because the clues and characters' train of thought were just thrown at me in a never ending stream of dialogue, when what was needed was more exposition.
Genre aside, I prefer a book that's balanced - as I've said above.
I'd have to agree with Amanda Markham -- it depends. Some books are so dialogue-heavy it's hard to maintain track of who is saying what. Other books have lots of dialogue and are simply wonderful. (I'm thinking of Robert B. Parker, in particular -- though I think his later works were kind of phoned in.)
I realized, however, several years ago that I don't care for books that are too short on dialogue. The book that led me to that conclusion was a wildly popular book that I just hated: Isabel Allende's "Daughter of Fortune." Everybody was reading it, everybody loved it. I started it and realized how much I missed anyone TALKING. Dialogue is necessary to move the story along, let's face it!
It really depends on the writer. There are some writers who are very good at narration and there are some that are very good at dialogue. I would love to be able to find an author who was equally good at both...a narration that put me into a story and a memorable dialogue. Or at least a dialouge that I can follow somewhat easily and do not have to read it several times over to figure out who's saying what.
I guess I'm a bit weird. I like movies and tv shows that have a lot of dialogue to them, as long as it's funny or memorable (eg. Gilmore Girls, Grey's Anatomy). I don't really care for the movies and shows that are light on the talking and heavy on the action.
With books, as I haven't come across too many writers that are great at dialogue without tripping me up-I like a good long narration, as long as they don't spend five pages describing a tree or something.
It does depend on the story, though I have a soft spot for dialogue. I like reading plays, especially Shakespeare's, and those are nearly all dialogue.
Scenes that are all or mostly dialogue move quickly in comparison to those with lots of narrative, so they can be used to heighten tension. Especially if the only-dialogue happens naturally, e.g. a telephone conversation or an exchange over the radio.
I have to agree with Marian. As far as pace goes, narative (usually) slows the pace at which i read down and I can't stand it for to long. I like a good narative story, but I need some dialogue to break it up and make it feel like I am reading it faster.
I think TV/movies/plays are the opposite. These are much more visual and dialogue slows down their pace.
I'm reading the narrative of Frederick Douglass. He was a brilliant man who escaped slavery and became an abolitionist during the final years of the American slave trade. I must say, the man's story is powerful, and the fact that he wrote it as a narrative makes it feel very authentic. I prefer narration when reading a biography, but dialogue is the way to go as far as fictional works are concerned.
I suppose I like a good balance of both. If there's not enough dialogue I tend to get bored. However, If you don't have enough narration and description then it's hard to tell what the heck is happening. I can say that I'm not a fan of books that have page upon page of description, and hardly any dialogue. Especially, if the narration is just describing pointless things like flowers for two or three pages.
I think it is a delicate balance. narratives are often tedious and books with complete dialogue often seem like screenplays. I believe if you use narrative to set a scene the dialogue becomes more interesting.