The difference between the two options is:
Specifying the protocol
By using either,
Multiprotocol = rpc
Shared Memory = lpc
NWlink IPX / SPX = spx
Banyan VINES = vines
Apple Talk = adsp
TCP = tcp
This is the recommended way. I also feel its safer as DLL names are likelier to change than protocol names.
It also allows you to change the port number, rather than configuring it across the board by using the SQL Server Client Network Utility.
Specyfying the Library without the dll extension
Specifying the library will use the same name as the actual network DLL library file without the .dll extension.
Example:
TCP/IP: C:\WINDOWS\system32\DBMSSOCN.dll
Named Pipes: C:\WINDOWS\system32\DBNMPNTW.dll
Multiprotocol (RPC): C:\WINDOWS\system32\DBMSRPCN.dll
NWLink IPX/SPX: C:\WINDOWS\system32\DBMSSPXN.dll
AppleTalk: C:\WINDOWS\system32\DBMSADSN.dll
Banyan VINES: C:\WINDOWS\system32\DBMSVINN.dll
This will work best when you want to write your own network library.
Please see SQL Server Client Network Utility.
The performance trade-off is minute and not noticeable. It is best to stick to standards and have it configured in the web.config as other developers will know where to look for the connections settings. Similar to having a data-source connection in java.