I've done both.
In the mid 8os, after working from horribly bland designs for Saturday Morning cartoon shows, I got a job that was much more fun (for me) - designing characters.
First for Dic's Heathcliff and then for presentation departments at Hanna Barbera and TMS.
Designing characters in the abstract for pay, and not having any responsibility for any of the other departments in a cartoon studio is a fun job.
You don't have to worry if your designs actually work and what problems they might cause for the other artists. This is a selfish profession, and if I wasn't able to sell my own cartoons, I was glad to have it. I hated drawing the boring characters in Saturday Morning cartoons doing the boring things the boring writers would come up with - or not come up with, but just steal from the last 30 scripts they plagiarized.
At least now I could personally have abstract fun creating visuals that might fool an executive or impress my artist friends. The kinds of designs I usually came up with for "development" while sometimes superficially interesting to look at, were in reality usually pretty shallow. They weren't really characters, because no one had bothered to work out entertaining personalities for them - and that wasn't my job as I was told many times.
When I designed my own characters though, I was using a whole different set of rules.
These designs couldn't just look superficially interesting; they had to be characters. Real ones with souls, personalities and humor. That made them harder to coordinate the poses and the design. It shocks you to reality when you have to come up with poses that tel a story with your own awkward designs.I had the lucky break to do layouts on the Jetsons after serving a stint as a "designer" for Iwao at Hanna Barbera on bullshit pitches designed to trick Network executives - shows with catchy names like "Rock Wars".
Having to draw an expert character designer's characters (Ed Benedict) and make them move and act and perform tricky things forced me to look at everything about cartoons in a more mature way.
I discovered that no job at a studio should be completely isolated from another. Each specialism had its role in making the overall cartoon better.
To me, the most important job in a cartoon is animation - the guy who actually has to bring the characters to life on screen. Even a director's job is to create the optimum situations and framework to display animated characters doing things that only animated characters can do.
Unfortunately, no one in America (on TV) did animation anymore, so I used the layouts on the Jetsons to create the poses and acting and life as a substitute for animation.
I came back from Taiwan a much wiser and abler cartoonist, because I now knew the results of good or bad stories, storyboards and designs and how they affected the potential life (or lack of) the characters.
From then on, I never believed in model sheets again, except as a starting point. The people who have to pose and move the characters are the ones who have to come up with the myriads of new expressions, poses and shadings of personality that a mere character designer - abstracted from the visual telling of the stories can't ever do.
That's why many of the best character model sheets are made by animators and directors. They make them functional because they have to use them themselves.
http://johnkstuff.blogspot.com/2007/01/animation-school-lesson-9-_116873606139658339.html
Modern design is completely abstracted from the process of animation today. TV animation is mostly done in flash - and even when a show theoretically does "traditional" drawn animation, the animators are rigidly forced to trace the model sheets.
Why does everyone today want to be a character designer? Because it's the only potentially creative job left. Unfortunately even that is not very creative anymore because everyone just copies the same designs over and over again and each year they get more primitive. How many times has DeeDee been completely ripped off?
But the design has never been animated as well as when Genndy animated her.
It's now at the point where anybody can be a character designer - as long as you can fool the executive in charge into thinking you're the hip new thing that's already been around for 25 years.
It doesn't matter if the designs are actually animated characters anymore.