A little bit of both. Like most seasons there were two arcs that ultimately ran into one. Season 3, for example, had the Faith arc and the Mayor arc until the two combined for the end of the season. In season 6 you had the Willow arc and the Trio arc which appeared to be seperate issues until Warren killed Tara and set Willow on her path.
It was pretty much the usual thing for there to be a Little Bad (Spike, Faith, The Initiative/Maggie Walsh, the Trio) and a Big Bad (Angelus, The Mayor, Adam and Dark Willow) each year. It is even possible to assume that season 5's Little Bad could be seen as being Joyce's health problems as opposed to the Big Bad of Glory.
There were only twelve episodes in season 1 and so there wasn't much time to develop much of an arc, beyond the general theme of the Master, so the Little Bad idea doesn't really apply there. The main exception was season 7 where it is pretty much just the First all the way through.