Clearly I am an ignorant woman and would really appreciate some advice as everyone tells me different things! Please help!
We had an extension built a year ago. In the bathroom (approx 10m2 the builders laid the tiles on flexible adhesive on top of chipboard.
Unfortunately a huge amount of tiles have cracked, always in a line along every join in the chipboard.
Our builder says the cracks are due to settlement (and it is true there has been settlement) but other people tell me that the tiles must be laid on marine plywood not chipboard.
Now the builder tells me he will re-lay on Wedi board. Should I go for this or marine ply?

Your builder/tiler should have known better. Perhaps he did? Were the tiles a last min change or was he told at the outset it was to be tiled? If the latter I'd consider asking him to come back to redo it properly. I doubt it's "settlement", more like it's the floor flexing very slightly as it's walked on.

Google "tiling a wood floor" will find lots of advice on how to prep a wood floor. The tile companies and the adhesive companies all give much the same advice. Must be rigid however you do it.  Generally they recommend 15mm plywood screwed at 150mm centers over existing floor boards or lift the floorboards/chipboard and replace with 25mm plywood onto the joists with extra noggins. Some recommend two layers of thinner ply with staggered joints.

I hear the BAL reps are good..

http://www.bal-adhesives.co.uk/technical/faq#q9