I think it depends. I like both versions, but when it comes to who I'd rather have in my party, I'd take the princess version. While the warrior version may seem strong at the start, she doesn't get much better at all, while the princess-like one not only levels up quickly, but she has pretty good stat gains (and surpasses warrior Kara in every aspect).
Also, princess Kara has the 2nd highest tech levels in the game (ends up being around 21,21,20,20), with Laya having the highest (Laya has straight 21's). Sadly, warrior Kara has the worst techs in the game (and I thought Gwyn was bad, which is the case until later levels). So compared to princess Kara's numbers, warrior Kara only has around 11,11,10,10 at her lax level.
While I may like princess Kara as far as a playable character goes, I do believe that I prefer warrior Kara's background and the glimpse of her personality that shows in the very few lines she has.

Still, if only there was more character development!
Another thing I like is how the path you take with Rhys literally changes who she is in the end. I can't think of any other games where your decisions impact a character to that level, either.
And, to add to my rant, Kara was one of my favorite characters for the longest time, but now there's many characters I like so it's hard to pick a single one as far as that goes...
