It's a question, I think, that every book lover subconsciously asks. My personal preference goes to bookstores but then again, that's my instinctive answer. I think we should take the time to analyze both institutions before making a judgment. I was browsing through Filipino Librarian's blog and more importantly, the comments section of her entry on the topic. It made me re-evaluate how I'd go about reflecting on the topic.
First off, both institutions have evolved. I mean once upon a time, both bookstores and libraries might have been similar, except one sold books and the latter lent them (and was bigger). Nowadays, I think they're two very distinct entities. I mean let's look at bookstores. Bookstores aren't just places where you purchase books. Nowadays, there's a sofa where you can browse the books and read them. I don't know about the US but here, some of the more prominent bookstores have cafe's that sell coffee and pastries. National Bookstore, one of the biggest bookstores in the country, certainly breaks the typical bookstore mold as a bulk of their inventory isn't books but school supplies. Libraries, on the other hand, are evolving towards a different direction too. It's slowly becoming more multimedia integrated rather than simply books. Computers and free Internet access also mark it quite distinctively from bookstores. Both institutions are easily independent creatures, now more so than in the past.
Of course there are some things I'd like to clarify. First off, most libraries aren't free. There's usually a fee (usually for your ID or library card). It might be a negligible fee but it's a fee nonetheless. Another important part of libraries I think is the fact that they stock old books. Bookstores are hard-pressed to stock old books, whether due to the fact that they're out of print, or because there's little demand for them. Another point worth mentioning I think when it comes to libraries is priority. Usually, it's a first come, first serve basis. So just because there's a book that the library stocks doesn't necessarily mean you have access to it, such as when it's loaned out. Some books might have multiple copies, but that's not always the case.
On the part of bookstores, I think bookstores can benefit from librarian-type personnel, although obviously not everyone employs them. At the very least, salesladies and salesmen know where a particular book should be, or at least are knowledgeable enough to direct you to customer service where the person in charge checks whether the particular book is in stock or not. There was one experience at A Different Bookstore in Eastwood Libis where a customer was asking information about a particular book and the store manager was easily discussing the book and related books that might interest them (I was tempted to interrupt but the store manager was handling herself pretty well, so I didn't). And I think that's a common occurrence--customers ignorant of books and ask the sales people what book they might recommend for this and that. That's a strength of independent bookstores that big bookstore chains can't, not necessarily because of expertise but because of the sheer volume the latter has. I don't one single person can be familiar with every single book in a big bookstore (and the same goes for libraries) and talk extensively about them.
An important point to consider however is reader mentality. Are you the type that reads and rereads books, or are you type that reads them just once? For the former, book ownership might be the way to go which libraries simply don't provide. Of course there are also some who "try before they buy" so a quick visit to the library followed by the bookstore days later might be the logical conclusion.
Of course I'd also like to point out that people like to collect, to own stuff. The first libraries weren't public libraries but rather private ones and that arose from the owning mentality. (And in many ways, perhaps that's why capitalism is so lucrative... the concept of ownership and property is so natural to human beings, to the point that we start thinking we "own" people and classify them as property.) I don't reread my books (most of the time) yet I have this urge to own my books. Perhaps the best advantage I see in this is that not only do I have to leisure to do whatever I want with the book (i.e. not take care of it properly), I can also loan it to friends and acquaintances for an indefinite period of time (I think some of us have been late with returning books we borrowed from the library). Unfortunately, book ownership also take up space and some people strike a balance by keeping the books that they really really want, and then sell or give away the books that they own but can part with.
Libraries, on the other hand, are communal. Space eventually becomes an issue (as is expansion) but that's a good problem. Public libraries tend to be bigger than private libraries after all and are able to stock more books than any individual. For those interested in book diversity, libraries are the perfect solution as they're not limited to one genre or field of expertise. It's also a bonus that they stock other reference material, from periodicals to microfilm to videos. Unfortunately, one should also bear in mind that the library is communal and not your personal playground. You can't wreck the books, you can't visit the place any time you want (only during their business hours), and don't expect to be catered to all the time at first priority (unless you're the only one there).
I'm not saying anything new when I say that bookstores and libraries are two different animals altogether. Still, as a bibliophile, if you know how to leverage each of those institutions, they can make the reading experience either a whole lot more comfortable.