Well i seem to be answering alot of my own questions here, but ill post my findings anyhow as other people may find it useful.
It seems that google will still index dynamic pages, even with a few variables - Provided the site is structured correctly.
I have two sites that i am comparing, both with relatively the same size product databases and both using 2 parameters in the URL to call the products. so .php?prodType=something&option=extra
Site 1 has been up the longest (12 months+), it is nice and clean however it has no doctype, title or meta tags. (I am getting around to this!)
Site 2 has been up for roughly 6 months, nice clean code, has all verified HTML4.01 strict w3c and has proper titles, meta tags etc..
For site 1, the main URL without any variables is indexed, so products.php , however none of the individual products with the extra variables are - which is BAD!
Site 2 however has each and every page indexed, i checked this by searching for the URL, and then for a string of text featured in the actual product description. Both showed up in the search engine (google).
So, there you have it... There are a few rules however that are mentioned along the way, which unfortunately i have cannot test at the moment...
a>It's 'preferable' not to include id as any of the names of your variables. so dont do myfile.php?id=1 .
b>Don't use session id's in the url, google doesnt like this
c>Apparently google can handle 2 variables quite fine, but the more you put in the less likely it is to index it.
Anyhow that is what ive found out so far, a few more things on the SOE side i will do to help the search engine out is give individual Titles for each page - rather then an overall site page, and perhaps individual keywords for each page too. These could be generated by the php code to suit the code which would be great.
Also a php sitemap listing each and every page/product although quite cumbersom, could only help with the searching in my opinion.
Any comments/suggestions/answers are more then welcome, thanks all!