3-2 can be a better defense overall, also against inside tactics, when you have good guards who can prevent easy passes to the opposing bigmen, or when your players have very poor secondary defense (e.g., when your guards have poor inside D, and your bigmen have poor OD). In those cases 3-2 might very well be the best defense to play, regardless of your opponent's choice.
If you have more balanced defenders, then in the case where your opponent's choice isn't so obvious, you might be best served by going M2M. If your opponent goes outside, then it might not be as effective as a 3-2. But if they go inside, the M2M will probably be better.