I was at a friend's new home the other day looking around, and the
insulation various parts of the house was stapled differently. If I
remember correctly, it was face stapled in the basement, ie: the flaps
were folded over the studs and then stapled. It was also face stapled
in a couple rooms on the third floor, but the rest of the house was
inset stapled, ie: the flaps were set back on the inside of the studs
and stapled to the sides, leaving about an inch between the drywall
and the facing of the insulation.

I looked around tonight at a few sites, and have found it suggested
both ways. Fine Homebuilding's site says to inset it, but others say
the face stapling is the ideal vapor barrier.

So is there a right way and a wrong way, or is it just the installers
preference? And drawbacks for one over the other?

Thanks all.