I'd go with square, but that's cause I play star trek. how ever, diamond would work better for missle command and double dragon.
Well, Star Trek uses this layout
1 3 4
2
Which probably works better with this diamond layout, but . . .
My opinion - Tekken 4 used square. Vanguard used diamond. Anything else, yes, the diamond is a 3-button layout, where the square is basically 2-button.
I'm pretty biased toward the diamond, because my primary panel will use something like this:
5 6
4
3 2
1
Another advantage of the diamond, is it is set up logically to use the points of the diamond as directionals if you don't have a 4-way joystick. Another advantage with the layout above is I can use buttons 4 through 6 for Gun.Smoke or 3 through 6 for Neo-Geo.
FWIW!