This isn't the place for a full treatment of the subject, but both types of families have advantages and disadvantages. Historically in the United States most people had nuclear families but also had close relatives living near by, and most importantly children had considerable freedom to interact with others in the community. It was a sort of middle ground between the extended families we see in some foreign cultures and the extremely isolated nuclear families common (but not universal) in the United States today. I should point out that many working class Americans still have these sort of semi-extended families which in the academic literature are reckoned as "nuclear".
By contrast, in some cultures with very close extended families, these extended families become extremely controlling. I have read of places where anyone wanting to open a small business has to leave their own country to do it, because if they do so in their own country hundreds of relatives will show up demanding free stuff just because they are distantly related. To give them what they want is to go out of business, and to refuse is to dissolve one's connection with one's family, and therefore with one's community. The only way to avoid these disasters is to leave. Therefore such places never improve and their people stay dirt poor and saddled with obligations.