I'm in the former category. I always choose the yarn colour with an idea of what I'll be wearing the finished item with. I have a clear idea in my mind regarding which silhouettes and garment lengths I prefer. The combination of leaving the corporate world and a weight loss four years ago meant I ended up slowly replacing a lot of my clothing. I was reasonably strategic with the new purchases and kept the colour palettes fairly neutral. I have basics in black, white, grey and lots of denim. These items give me a simple backdrop for the knits. Last fall I bought a pair of burgundy skinny jeans and they work surprisingly well with other neutrals and these two sweaters.
What about you, are you planning ahead or do you end up with wardrobe orphans of great knitting without having the rest of the outfit ready to wear?