Dynamos don't produce any toxic waste. Dynamos are ignored by thieves. Simple dynamo systems only power the lights when you are moving. This can leave you vulnerable if you stop at traffic lights. There are solutions to this problem, but they add complexity and increase the number of things to go wrong.
Dynamos burn out halogen light bulbs.
This is usually only a problem if you ride very fast for long periods. It can be solved with a voltage regulator. Dynamos which rub against a tyre have make a buzzing sound when they are being used. Any dynamo will slow you down. However, if it is properly set up, it is not a big problem.