Should we combine or separate income & cash flow statements?

I've been advising some friends on personal finance and investing, and it is harder than I thought. Their familiarity with and willingness learn accounting and finance varies, and those without much knowledge in these subjects want me to guide them step-by-step.

While I refer my friends to my "The Principles of Wealth Accumulation" series for knowledge-building, there are few concrete step-by-step guide to lead a newbie to become financially "ready". So, I am now writing a step-by-step guide to personal financial planning (without the use of a financial adviser)... but I'm stuck on financial statements and budgeting.

The problem
Should we combine or separate personal income statements and cash flow statements? The financial analyst inside me tells me to separate them. But the teacher inside me tells me to combine them and make things easy for the beginner. I am torn on which method should I recommend my friends (and others) do.

The arguments
For separating them: In proper accounting, income statements and cash flow statements are separate. Interests on debts (e.g. mortgages, credit cards, and loans) are expensed, but the borrowing or repayment of debt principals are recorded in the cash flow statement as financing activities. Through operating, financing, and investing activities, we increase or decrease our assets and liabilities on the balance sheet.

For combining them: It is easier to list our debt payments as expenses from the bills without separating principal and interest.

For separating them: If we don't separate principal and interest, we run the risk of double-counting credit card expenses (e.g. counting a movie once as an "entertainment expense", once as "credit card payment").

If we finance a new house with a mortgage, a new asset (house) and a new liability (mortgage) will appear on our balance sheet without explanation. Then, in future years, the liability (mortgage) will decrease mysteriously.

For combining them: We will know about the house purchase even if it's not reflected in our financial statements, and we'll know that we are paying off the mortgage.

If we budget based on debt interest expenses instead of the entire mortgage payment or credit card payment, we run the risk of running out of cash to meet our debt obligations.

For separating them: We can include the required principal repayments in the budget by listing them as cash flow budgets.

The question
What would you recommend others do as they prepare their financial statements and budgets? What are your arguments or reasons?

P.S. This post was featured in the Carnival of Personal Finance #157: Third Anniversary Edition at Consumerism Commentary.