Should I use a raised-face or flat-face flange?
Match the mating flange. Raised face suits most steel piping; flat face suits cast iron and brittle equipment.
Use whichever face matches the flange you are bolting to. Raised face goes to raised face, flat face goes to flat face. The real question is what the mating equipment has.
Raised face
The gasket seats on a small raised ring. Bolt load is concentrated on that ring, so it builds high gasket stress with modest bolt force. That is why it is the default for most steel process piping.
Flat face
The gasket covers the whole face, usually out past the bolt holes. Load spreads evenly. Pumps, valves and vessels made of cast iron or other brittle materials often have flat faces because a raised face would lever the flange and could crack it.
Mixing them
Bolting a raised-face steel flange to a flat-face cast-iron flange is a known cause of cracked equipment. If you must connect the two, the usual fix is to machine the raised face off the steel flange and use a full-face gasket. Check with the equipment maker first.
More on facings in flange types. Next: choosing a gasket.