Between these two houses, which would you prefer?

Comparing the exteriors, if you like the white one on the left more, me too.  The design makes it difficult to guess which decade it was built in. It could have been built 10 years ago or 70 years ago yet still looks good today. A sign of good design. The house's clean-lined architecture, with an aesthetic based on form and proportion, complements the property nicely. This is a house designed with its setting in mind. Another sign of good design.

The house on the right is a new construction. This house is better designed than most new homes (i.e., McMansions) thanks to nice detailing and material use. But typical of today's new constructions, the house's exterior, particularly the overall form, is muddled with unaligned windows/doors, haphazard roof lines. The potentially dynamic juxtaposition between the house and garage, like of the older white house, is short-changed by after-thought detailing and proportioning at the garage. Too bad a little more effort wasn't spent on the design.

The new house will look good for the next 10, 15 years, but lacking good form and proportions, it won't have the enduring appeal of the older white house. It's due to modern homes requiring more closets/bathrooms, higher ceilings, more amenities. It's harder to have good form and proportion for an exterior when it has to accommodate more inside. Unless the architect spends enough time toiling on a design like in the olden days, form and proportion are often short-changed in today's homes.

As for the interiors, on the other hand, I prefer the new house's interiors. Older interiors worked well in its days for how people lived then but just don't cut it for today's living. 

Today's family needs an open kitchen, no longer hidden away. The days of inexpensive servants are long gone and modern conveniences have made cooking an enjoyable ritual for the whole family. We also need an open floor plan where the family can be together while doing different things (watching TV, cooking, surfing the net). I also like to add good flow and good connection with the outdoors in such ways for the house to work well for occasional entertaining as well as everyday living.  

But I disagree with the current "the more square feet, the better" mindset. Modern construction has allowed us the luxury of space that used to be much more expensive. But like the Victorians who went overboard with ornamentation when millwork became affordable with mass production, we're going nuts with high ceilings and square footage. It's getting to be a case of  too much of a good thing. The MacMansion craze is yielding bigger and bigger houses at the expense of quality of space and detailing.  I'm sure the future generations will look back at our MacMansions and wonder "what were they thinking?".

For that, I'm a fan of Sarah Susanka whose "Not So Big House" concept is catching on. She advocates building smaller than originally planned but with the same budget for more detailing, better materials. She makes a good case for how a well-designed smaller house can be more satisfying in the long run than a cavernous house designed to impress. She essentially preaches quality over quantity, which is what the waterfront/infill locations need more of, to do their prized settings justice.

In the old days, people spent much more time planning, designing their homes, thinking of houses as life-long residences, even as heirlooms. Their homes generally are more beautiful and enduring than the stuff we put out today.  

If we are to build next to older homes or in a beautiful natural setting such as waterfront, we should put in  the effort in design to make sure each new house adds to its setting, as opposed to needlessly distract from it (by appearing too large, too grandiose, using haphazard/convoluted detailing).

The ideal waterfront/infill house should have good form and proportions but with the amenities and layouts that function well for today's living.  Frank Lloyd Wright couldn't have said it better "Form doesn't follow function. Form and function are one". The 99% perspiration part in architecture is to find win-win solutions for form and function, where each is enhanced by the other. People in the old days did it all the time. It just takes more thought and effort.