If you are unable to sacrifice 12 power worth of creatures, then you cannot choose that option; in that case, you must sacrifice Phyrexian Dreadnought.
2013-04-15 • wotc
Reverted to its original wording, this now has an "enters" triggered ability. During resolution of the triggered ability, you choose one option or the other.
2007-07-15 • wotc
If the Dreadnought is no longer on the battlefield when the triggered ability resolves, you may still choose either option.
2007-07-15 • wotc
The sacrifices are simultaneous, not one at a time.
2004-10-04 • wotc
Phasing in does not trigger "enters" abilities, so you don't have to sacrifice again if it phases in.