you can use whatever side that suits your needs. i like using foam applicators to apply lsp's, trim dressings and mf (square) applicators to apply spray wax's. it's personal preference...
I like foam applicators. They don't absorb as much product as a microfiber/terry cloth applicator would. I sometimes read about applying interior dressings with microfiber/terrycloth applicators. I would recommend foam applicators for the paint though, whether u're using a paste wax, liquid wax, or any other liquid product.
I like foam for my waxes and sealants, but I find that the terry works better with products that need a little bite like scratchX or colorX and some of the cleaner waxes.