More loops means more redundancy, so the first picture (with a loop for each player) can take up to two failures and still work - and any double failure (within one loop) would never cause the other loop to have any problems. On the other hand, the multi-loop approach is somewhat more complicated to set up, and might require a little more wire. I personally ran both of the ground terminals on my IPAC4 to a barrier strip and ran separate loops for the two players and another for misc/admin controls. A few hard to reach controls had their own home runs right to the barrier strip. Tons of redundancy, but fairly complicated.
I recently rewired the entire CP to use eight CAT5 cables with each one having the last contact setup as ground. The math for the IPAC4 works out exactly (7 contacts per cable x 8 cables = 56 inputs, 2 cables per user, one for SW1-7 and one for joystick/start/coin/SW8) This way, they are interchangable and each group of seven signal wires has its own ground loop. However, the main reason behind using the CAT5 was to make my CP detachable using female/female "butt" connectors to link the CAT5 cables coming from the encoder side and the ones coming from the CP. (And because I can get CAT5 cables from work for free by the shovel full!)