Sit on for ease of on/off, but will get wet. Sit in, if looking to use in cooler temps, and want to stay dryer.
I have a cheapo 10'er sit in as someone noted above. It has sat behind my shed unused for probably 6 years... My kids are getting to the age, where they might want to use, so might as well keep a hold of it. Being out $200 is much better than being out $800! Although, that $200 balloons out a bit after roof carrier, paddle, vest and fishing accessories can more than double your boat price... It works just fine as a small fishing boat, but prefer the boat that I have now, that I can walk around on, and motor from spot to spot. I got a good 4-5 years of fun out of it though.
A nice seat is a good thing. That said, you can buy padding to make the cheaper ones more comfy. The newer cheap ones seem to address the seat comfort. I can be on the most comfortable chair in the world, but sitting straight up with legs straight out like that for more than 2-3 hours, is going to be uncomfortable regardless. The sit on tops allow you to move around a little more. I got to the point with mine, that I could sit with my legs out of my sit in, and even kneel. To me, nothing beats standing though.
One thing to note about the 10'ers, they are only good for people about 6' tall or less. Taller than that, the leg room is lacking.
I had a few friends with nicer yaks. On float trips and fishing, mine did just fine compared. If your daughter is Ms. Outdoors, and you know the thing is getting used a ton, buck up and go for the top of the line. Many are more expensive for a reason. Same thing, if you were buying for yourself to fish from a lot. Those Hobie sportsman models with the foot controls are really nice looking. One of my biggest complaints while using a yak, was getting to a good fishing spot, and by the time I had my anchor ready and down, I was 20' away. Don't even think about tying on something new or baiting up, without an anchor down, or you'll be a 2-3 minute paddle back to your spot if any wind. Those Hobie's look like the foot controls would address that.
Canoes hold more beer, BTW...