WHICH TO USE?

I don't personally subscribe to the 'cutesy' being bad for mature games. You can pull off some serious, dark games using what people might call cutesy - and it's all the more potentially disturbing (or what the fuck inducing) with the graphics style. A lot of the choices should be a) to create a solid art direction between your sprites and backdrop and b) to emphasize the theme and mood of the story. In the end, which template style you choose is going to be somewhere in those two. It's hard to say which is better without seeing the overall art direction.

For an example of some more serious and potentially mature games with cutesy graphics, look at almost any serious effort on the SNES and early PlayStation era (but not just on those systems). Lunar is a good example (oh god, I will forever be haunted by those words, "No, not Ghaleon, dear Quark. Magic Emperor Ghaleon!" - ok, the voice acting sucked but I was like 12), as is Lufia (and don't just rely on the English translations of the game for the seriousness of the story; the English versions suffered from a lot of technical limitations in translations at the time). Breath of Fire II is also a good example (I can't recall BoF's story, but I've recently replayed BoF2 with a proper translation and it's a hell of a dark game).

Basically, don't just pick a sprite style by itself; think of your entire art direction and the type of pallet you're going to use.

Well, again, that's a response I really personally couldn't give without more details and some idea of your direction. Again, I'm of the thought your theme and mood should be reflected, even in your graphics choices. Either could fit into a number of game types, but both could be a total flop if chosen solely on the premise of which players would prefer without seeing anything.

The only comment I can give, as is, is that with the second one, seeing it just as I am now, I would expect a more detailed chipset with a more 'grim' pallette choice (more washed out, less bright colours).

author=White_Rabbit
The "cutesy" style mainly exists because it comes from a time when possibilities where quite limited, and these where the best solution to fill the small amount of pixels existing. It survived for one reason - tradition.

I refute that statement. There're a fair number of games that exist in that period that don't use the smaller 'cutesy' styled sprites.

Shadowrun is a big one. Chrono Trigger (could arguably be called cutesy, I suppose, but they aren't smaller pixel sizes). Secret of Mana, Seiken Densetsu 3, Secret of Evermore, Illusion of Gaia (could potentially fall into the same category as Chrono Trigger). Super Mario RPG (yes, potentially cutesy, but not the smaller graphics). Ogre Battle might be considered in the group, but it does use smaller sprites for the battles.

And these're just off the top of my head without looking anything up.

But yes - I said it before, base the style of everything the game's going to include.