Liquid funds vs FDs: Which is better?

Liquid funds have been making the headlines for all the wrong reasons and probably making you question their safety; if at all you have invested in any liquid funds and if not, you probably should wonder and want to know more about them. Do they make sense for you? And the bigger question today perhaps is- do liquid funds still make sense when bank Fixed Deposits rates have shot up to almost 10.50 per cent?