Terrain generation

Right now I am working on this 2d game SFCave.

Game has infinite game play. For which I have to create terrain but can't able to decide how to perform this task. I have two options

1. Create graphics from designer and load each of them sequentially.

2. Generate terrain dynamically without any graphics created from designer.

After seeing game, I can't able to decide which option I have to select for game development. If I choose second option then how to create terrain dynamically. I have some concept in mind but not clear one.

So I need some master input from you guys.