While I work, I alternate between earbuds and AiAiAi headphones depending on what type of work I'm doing. If I can listen to music but still need to have one ear open to keep tabs on what's going on around me, I defer to my earbuds. They're easy to access if I need to listen to something quickly.
However, if I know I'm going to be working on a project I need to concentrate on and don't want to be bothered, I put my AiAiAi headphones on.
When I used to live in Boston, I would always walk to places or use public transportation and I would oftentimes use earbuds because they're easy to take off when you run into a friend on the street. It was also more convenient to drop them in my bag or pocket. Most friends however, definitely preferred headphones while commuting, saying that it made the trip more pleasant with a high quality listening device.
In the end, I definitely need both earbuds and a good set of headphones.
Do you own both or have one set of earbuds or headphones that do the trick for all your needs?