I think that if you want to have a cabinet inside a bathroom, for me it's better if it's a built it in. So you don't have to worry about the tiles or the walls even if it's not straight becuse it won't be obvious anymore, and it will also save space. But when the problem already exist like this, well then I suggest that you should consult a bathroom expert to help you decide what to do. Most importantly look for craftsmen who will work in their best in doing this job . For some bathroom cabinet and tile ideas, I think that http://www.bathroomandkitchenguide.com/ can help.

We typically tile behind the vanity cabinet even though no one will ever see it. It's just easier for the tiler and give us more flexibility when we install the vanity cabinet. We're not worried whether we move the cabinet a bit here or there because there's only tile.

In your case, make sure you know the exact dimensions of your cabinet, if you go with your contractor's recommendation. Also make sure that the sheet rock is at least green board and not just drywall. Durock and wall board works too.

Most walls are not straight. Usually the tiler makes sure that the wall is straight by applying more or less adhesive to the walls and then applying the tiles. That way the vanity cabinet is pretty flush against the walls and their is no wide gap.

Two other considerations:

a) Is there a reason why the contractor wants you to do this? Ask your contractor why he wants to do this. Perhaps the wall or the plumbing behind the vanity is bowed or it will make the tile work difficult. Or maybe you are just short of tiles. How big is the vanity cabinet anyway?

b) What's going on top of the sink? Is it more tile with a listella or bordura and also what kind of sink top are you using? Granite, marble or a cultured marble sink with a backsplash. See the attached and also the first photo in another article I wrote on bathroom sinks to get an idea of what I am talking about at http://www.millennialliving.com/Activities/Renovation/Kitchen/buying-fau...

You want to make sure there is a good seal between the cabinet and the sink top to that water does not get behind the vanity cabinet, especially is there won't be tile there.