I'm not sure which method holds up the best. Just be sure that, whatever method you use, you use the technique that goes with it. I read about one quilt on the QB where the task of copying photos to fabric was given to someone who didn't use the correct type of printer.
Here are a few links to consider:
http://www.softfabricphotos.com/info/faqs.cfm (need an inkjet printer)
http://cqmagonline.com/vol04iss02/ar...37/index.shtml (need a laser printer)
and here is a link to someone who tried several methods:
http://www.craftpassion.com/2010/07/...-printing.html