I've used the deep litter method. Actually, I'm using it right now in the run. It's very dry in the run right now, so it works. I also put bags of grass clippings in there for them to eat and rummage through, which gets scratched in and eventually turns to bedding. I plan to remove it all in a few weeks as we are building a new run. I've had no smell and minimal flies, but I also use DE. I spread it with a flour sifter.
I've tried deep litter in the hen house, but now choose to just replace the bedding when it gets dirty. The house is in our garage, and if we let the pine shaving bedding with the DE sit too long, we get way too much dust from all of the chicken scratching. I think deep litter works a little better when you have some moisture, but we've had problems with lice, so I don't like to keep the bedding in there too long. I'm sure others have had success but this is what's working for me right now.
BE CAREFUL not to breath in the DE at all. I use it in my henhouse to keep things dry, but when I replace the bedding every couple weeks I always wear a respirator. I developed a sore throat and a nagging little cough that went away when I started being more careful with the DE.
I got mine through the local feed mill...she ordered it for me and called when it came in.