It's entirely a personal preference.  I went with squared inwales (with the edges relieved by sanding because I thought they looked good -- and also because we have an ancient (100 year old) Old Town canoe which has inwales formed from the ends of it's ribs -- and they are thus squared. Some prefer rounded though.

Dave Metcalf

Charlottesville  

   I am leaning towards the squared ones myself. They look to really match the concept.I toyed with the rounded ones when I saw the one guy do the curved ones (He goes by Leatherlungs in the Water Tribe). I REALLY liked that look and thought I would make a variation of it. I had the round over bit already loaded in the router and thought I would see what it looked like.

I will be using the method where you drill holes to create the ends of the spacers, then I will round those edges over with a file.  My understanding is that spacered inwales also provide attachment points for fenders, etc.  As such, I want to eliminate sharp edges that cause chafe.  I also think rounded spacers look really sexy and shows that the builder took the extra time to make that detail.