Well, neither one is "better." It depends upon what your needs are.
software or computer

Software is better, with a stand alone you need to reset the pieces every single time, and if you study positions you need to set them up manually each time, why bother with all that effort?.

The stand alone must make moves without a human input, otherwise it is not that great. You need this one to enjoy a "computer" :)
That is pretty amazing!!

At US$3,000, you won't find anything better:
http://blog.chesshouse.com/electronic-chess-computer-that-does-it-all-except-move-the-pieces/

Stand alone chess computers are very nice if you want to experience the feel of playing real chess. And the good ones can be very expensive. On the other hand you can download free chess playing gui's that can do a whole lot more than just play chess. They can analyze positions, store millions of games, connect you to the internet where you can play live people throughout the world and so forth. I personally use software at home and I attend a chess club twice a week so I can get the feel of a real chessboard and enjoy real competition.

since im poor ...and cheap im looking at a few free programs and digging out all the books that have been packed up for years...moving every five years made it hard to feel like unpacking

since im poor ...and cheap im looking at a few free programs and digging out all the books that have been packed up for years...moving every five years made it hard to feel like unpacking
Moving every five years, you say. Are you in the military? Chased by the IRS? Too many ex-wives?
Get a Novag Carnelian II. It's got a better display than the Obsidian and it's cheaper although its play is not quite as strong.
Playing with real pieces on a real board is the way to go, even if the pieces and board aren't quite tounament size.

I use HIARCS Chess Explorer running Stockfish DD. For the most part, software is going to have much better playing strength than a standalone computer, I would think.

I have a very old standalone chess computer set. I have been contemplating getting some software but have decided to stick with the standalone. I find it hard to visualise the game position and to analyse looking at a screen and make too many blunders.Playing with real pieces on my standalone is best.
need help deciding whats better to get a tactile stand alone chess computer like the obsidein novag or deep shredder12 for mac