They both suck equally, because you still can't tell if they are talking to the phone or talking to someone else. One of the benefits of having a phone is when you hold your hand up to your head, people usually understand that you are talking on the phone. Doing so with the hands-free phones defeats the purpose. Hands-free phones in public are stupid, and only exacerbate peoples' fear of interacting with anyone.
Kinda reminds me of a Season 1 Boondocks episode where a couple of characters are debating about them. One thinks it's hot stuff, and chicks dig it, and the other is saying that it makes him look like a fool, along with anyone else that's around them, and it's just another piece of technology fit for generally and/or socially ignorant people. Although, watching a crime drama like Person of Interest, it does make coordination more stealthy, and is not such a bad idea after all.
As for talking to oneself, I do it myself. Saves mental processing power that can otherwise go into deeper thinking. I mean, too much effort is taken up by voicing the thoughts in your head, it's more efficient to voice it out, an think harder while hearing yourself talk as to refine any thoughts you have running in your head. It's sorta like using your hands to sculpt imaginary things, in a way making designing things more efficient. Like having a 3D modeling program running in your head with the most intuitive interface ever. In this case, it's verbal, when you talk to yourself. That's at least how I see it.
In a different perspective, as crazy as it looks, it's quite therapeutic for the psychology. Especially if you look into the past and such. It's cheaper than going to a psychologist/iatrist, and is still rather effective; provided you're honest with yourself, which is a key step. I consider it a verbal means of psychological exhaust. You know, cooling down and/or detoxing the mind.