You should always use a transfer switch. And yes on the ground rod
You never tie a portable generator to a grounding system associated with a house, otherwise you may get circulating earth currents, at the least you may get noise on you radio, at the worst you could kill someone.
A generator is a seperately derived system, it should always be kept away from the mains wiring, unless it is fed in through a transfer switch.
I have to go with what Darren and John are saying, if you only need power when the mains fails and you don't need it instantly, I would go for the labelled flexes and lights, etc.
After all, you can't run a whole house on most "portable" generators anyway.
