It's fine to pay cash for a house. A lot of time it's much more desirable for the sellers if a contract comes in without loan contingency - they would ask you to provide proof of funds
Some good things about NOT paying all cash - such as, you can improve your credit score, like Deborah said; you can use the extra cash and put into some good investments, hopefully make more money than paying for mortgage. some extra money for raining days.
Make sure you do save the extra cash insteat using it for none essential things.
When you get a mortgage, make sure you are able to handle the mortgage, insurance and all other expenses for years to come. Don't get yourself in a bind again!