The second option creates lots of n-gons (faces with more than 4 sides) all around the face with the hole in it. You might be better off just creating a square hole there and relying on the subsurf modifier to make it round at render time.
I neglected to mention that I would resolve the n-gons with a loop all the way up the side and then necessary loops down down to the bottom of the shoe, but thank you for the heads up