Of the two options I think the current one is better, and it's readily apparent the two cannot co-exist, one is based on troop type, in the sense of a specific type like "Imperial Infantryman" whereas the other is based on a class like "heavy cavalry".
That being said, the new system would benefit from more granularity, especially the ability to "lock" certain troops types like polemen or light cavalry to specific formations. Overall, though, the current formation system works better with the current battle system. Mostly you're better off grouping all your infantry together in a mixed block, instead of having pikes and swords be separate - something that was mostly true historically, too.