I've had both, and they both work. Both have advantages and disadvantages.
Drop-In Advantages:
1. Don't need to divert flow or use a separate pump. (This can be more efficient, as adding a pump also adds heat.)
2. Easy. Submerge the coil, plug it into the controller. Done.
3. Can be brought out just for the summer season, then put away again when the season is over, much more easily than an inline can.
4. No worries about a failed pump resulting in freezing.
Drop-In Disadvantages:
1. They don't make them in small sizes. (My current chiller is 1/10HP. Smallest I've seen a drop-in is 1/6HP.)
2. The hose to the coil is pretty stiff and not very long, so maneuvering it around things and into the right spot and getting it to lay so that the whole coil is submerged can be a challenge.
3. More expensive (generally speaking).
4. The cat, walking on the hose, can cause the coil to come out of the water. (Ugh)
Inline Advantages:
1. Come in a wider variety of makes and sizes.
2. Generally less expensive.
3. Easier to locate where you want it since the plumbing can go around turns.
Inline Disadvantages:
1. Have to plumb it somehow.
2. Can be less efficient if a separate pump is used.
3. Installation tends to be a more "permanent" thing, since re-working plumbing is a pain.
4. A failed pump can cause the unit itself to freeze and break. (Many have sensors that will turn them off if they get too cold.)
My current chiller is an inline (JBJ - nice unit), but I actually prefer drop-ins. If I could have found a small, quiet one, I would have gotten that instead.