While this topic is up what would people recommend if ones preference is for dry erase markers?
The new WotC "adventure grid" is nice. It folds to any easily packable size and travels well. One side is dungeon themed and the other side is outdoors themed.
You can use wet or dry erase on it, so you don't have to be paranoid of which you have (but still beware of sharpies!!!). What is nice about supporting both is that you can use wet erase to draw on more "permanent features" and dry for more easily erasable features. For example, you may use wet to draw the walls and pillars and dry erase for furniture, spell effect areas, and the like. Running a board eraser or dry cloth will take away the dry erase, leaving the wet erase.
My only complaint is that it is not very big. It is 25x21 full squares. It extends a bit beynd the full squares on the edges, so it is a bit bigger than 25x21 inches. The standard "3 foot" chessex "battlemat" is 24" x 36" and the Chessex megamat is 34.5 x 48" (my favorit size for at-home games).
I have both. I use the Chessex at home and the Adventure Grid at the game store (easier to pack).
Notes on other options (keeping in mind your questions about Dry Erase)
Lay glass or plexiglass over a chessex mat or gaming paper. If a more permanent area, use glass. If you use plexiglass, make sure you test the dry erase markers on scrap first. Some will stain. Old, plexi glass will scratch easier and marker will be harder to errase from scratches areas.
Dungeon Tiles can be drawn on with dry erase, but I find them inconvenient to use. I bought all the dungeon tiles reincarnated sets and have some older sets and I hardly use them. But if you want a mix of larger "blank" tiles to draw on along with tiles with various features and furniture, you may want to look into them.