Watchdog File Module
WATCHDOG FILE is a module that records all watchdog() events to a log file on your server rather than using the database. The goals are to reduce database load in general, and to provide an easier way of keeping track of your watchdog activity.
This module is intended to replace the Watchdog module.
It looks like the Raw Log module (http://drupal/project/rawlog) is similar to this module, but it is only available for Drupal 6.x.