I once studied the concepts with squares vs. hexes, and went with squares for the sake of simplicity with the system and players. With 3.5 there was a little math involved when firing diagonally in three dimensions, and so we'd pause for a minute or two to determine ranges. I was tempted during 3.5 to change every diagonal as only 5', if only to make the game faster, but was advised not to bother, as most were comfortable and others might exploit it. Hexes were going to be my answer to that, but moving laterally offers some of the same wonkiness that diagonals do - you just aren't moving as far for each hex as if you went perpendicular (as opposed to the 45 degree diagonal with squares).
To summarize, I'd stick with squares. Everyone knows them, uses them, and everyone will compensate using them diagonally. Spells will target the number of opponents/allies they are supposed to, and no one will be afraid of estimating the distance to a target askew from the grid.