Aerating does help relieve compaction and allow the water to get into the root zone with greater ease. If you have dry spots from water not soaking into the surface, you may want to work on building the soil structure.
What kind of soil do you have?

I just started the Jar test that grass1950 recommended I do yesterday. I will have the results of whats there and the percentages later today, Hopefully:) I believe that I have a sandy clay mix, if I had to guess it would be about 30% sand the rest clay and whatever else. later this week I plan to fertilize as well and get the ball rolling on building a good soil structure.

After writing my original post I stumbled across a heated discussion from dchall_san_antonio and another member about the shampoo method. DChall is very informative and I will be using the shampoo method later today if time allows.

One question I do have if anyone can jump in is will the shampoo method work for plants and trees that have issues with water absorption without hurting the plant/tree?

Thanks,
Jon

elbow,
I misspoke. The time frame for the jar test is 2 minutes, 2 hours and 24 hours.
I've never seen any reports that shampoo harms other plants or trees.
As for your original question about the pros and cons of aeration and shampoo, I'll try to address my take on that later when I have more time as there are many.

As a reformed organic zealot, I have to stay out of all organic landscaping forums these days because they're bad for my health. I got reformed when I went back to college and acquired some scientific knowledge to replace the hysteria and homebrewing mentality that had plagued me before. I am not averse to organic gardening and landscaping, but the amount of misinformation being spread by its disciples is pretty alarming.

I do all the lawn work here, and we have an organic lawn -- not because I'm always spraying beer, ammonia, shampoo and baking soda all over it, but because I do as little to it as possible. It's magnificent. It loves me when I leave it alone and just feed it three times a year and aerate it in the fall.

There are NO downsides to core aerating. Absolutely none. Does shampooing help your lawn? It might, if you have a water-repellency problem. Do you? This whole "shampooing the lawn" meme in organic cirlces makes my teeth itch. There is nothing, repeat NOTHING, you can spray on your lawn that will improve soil structure or break up clay. Organic matter, in the form oof shredded leaves or grass clippings, or compost, is all you can do. There are no magic bullets. (Yes, I did ace Soil Science class...as well as Turf Science.)

After a hot and dry summer, we core aerate, but first, we power rake if we have too much thatch or browned out blades. We did both last year, and it made an incredible difference in the health of our lawn this year. This is the first year in the 6 years we've been in Kansas that I am not doing repair/renovation to any of our lawn, and we have a total of 1.5 acres of it. The weather helped, but I would say power raking in addition to aerating really made a difference.

Here is a link that might be useful: Michigan State University Extension

"There are NO downsides to core aerating. Absolutely none."

I disagree!!!

If you have poa trivialis or poa annua, aerating will bring dormant seeds to the top and you will have a poa infestation!!!

Plug aeration and shampooing--pros and cons.

First, they are tools/aids that are available to serve a purpose. Just because they are available doen't mean they need to be used. I own a hammer-drill but I don't go out once or twice a year and drill holes in my sidewalk. I also own a bottle of Clorox liquid bleach, but I don't add a cup every time I do laundry.
Identify the problem, find a solution, and use the correct tool to impliment the solution.

Plug aeration. Removing cores/plugs from the the soil. The machines typically available for homeowner use remove a plug either 5/8 or 3/4" in diameter from the top 3-4" of the soil Usually the spoon is fixed to and rotates on an axle. These aerators are available as self powered walk behind models or riding mower/garden tractor pull behind. In very rare circumstances, a cam style serator can be available for rental--but vary rarely.Professional aerators (used on golf courses) have a variety of spoon sizes available ranging from less than 1/2 to almost 1", both hollow and solid tine, and can remove plugs over 8" deep (some solid tines can penetrate 24") and are usually cam actuated. This discussion will be based on home-owner style aerators.

Pros:
Will reduce the effects of soil compaction, thatch, hydrophobic soils allowing the turf to thrive or at least, recover. With topdressing and possibly the addition of dragging/raking, ammendments (peat moss, lime, gypsum, OM, sand, etc). can be added into the root zone. Water and air can be intoduced deep into the soil. Improved drainage in areas of standing water. Rhizomes can be cut separating daughter plant from mother and inducing the daughter to "mother" its own daughters.

Cons:
To be effective, a minimum of 20 holes per sq ft is recommended. As most home-owner available aerators produce 5-10 holes per sq ft per pass, that can be a lot of passes to get a bare minimum of 20 per sq ft. Even at 20 holes, you are pulling up soil cores and creating holes in less than 10% of the soil (although the collapse of the hole and the pivot action of the spoon as it travels through the soil will effect a greater area than the area of the hole for purposes of counteracting compaction or for aerifying the soil.) The plugs look like a flock of geese reside at your home. The aerator just dosen't pull up soil, it pulls up turf that will not survive and the action of the spoons puts significant stress on the turf--this is an aggressive action, Unwanted plant seeds (both weed and grass) can be brought to the surface and germinate. Aeration can spread nutsedge and rhizomeous (sp?) weeds like poa triv, and quackgrass (if present, either don't aerate or avoid those areas when aerating.--while most unwanted plants can be controled with post or pre emergents, these have no cure short of "maybe" RU)
It can be expensive, especially if you rent or hire it out.

Shampooing (aka (erroneously) liquid aeration) The use of a surficant to reduce water surface tension and allow water to easily penetrate soil, to remain in soil voids for future use by the turf, and keep the soil moist to improve absorbtion of subsequent waterings. Shampoo is recommended as an inexpensive surficant source.

Pros.
It's cheap. It effects 100% of the soil surface. It's easy- can be applied with a hose-end sprayer. It's fast to apply and if it's the right tool, will show results within a couple of weeks. Nearly everyone who has tried it, reports improved screw-driver test results over extended periods. Creates very little stress or damage to turf/grass. No unsightly residue and your lawn smells like a baby. It may be the only action needed to resolve hydrophobic conditions not due to compaction. It's practicaly idiot proof. It's CHEAP.

Cons:
It's cheap and easy--you'll need to convince yourself it can work. People will ask why your lawn smells like shampoo. (Questions can be reduced dramatically if you have a doobie hang outa your mouth.)
It does little if anything for compacted soil.
It can be counter productive if used on sandy soil. Personally, I have had mixed results. I have sandy-silt soil. I applied 36oz over 3k sq ft over a 3 week period. (so above the recommended rate). I had inproved turf reults on the hill section, but completely lost the turf on the flat areas. It could be that there is the possiblity (contrary to what the advocates say) of over applying shampoo, or the surficant effect adversly increased the leaching of water through the already sandy soil, or it's possible that the surficant treated water when obsorbed by the turf plant has an adverse affect on capilary function or other biological processes. If used in modration, shampooing may have a positive affect on hydrophobic soil (due to crusting or microbial causes) with little to no adverse affects. At 20 cents per thousand plus the cost of water--there isn't much down side even if it fails to work.

My philosophy is: Do whatever it takes to create healthy turf and roots. Strong prolific rooting will eventually take care of soil compaction, OM, and water penetration and retention issues.