Actually, what we do is something like a combination of both. This is maybe aided by the fact that my players didn't have any D20 experience before we started the Conan game. So this is how we do it:
I describe the initial situation to the players (setting up some minis on the board if it feels worthwhile). We roll initiative, and they tell me what they want to do. They don't really know or care about the game mechanics (yet), they just describe what feels right.
So I hear their description, and figure out the appropriate game mechanics, and we make the necessary rolls. During the rolls, I sometimes tell them briefly what the game term is, like "What you want to do is called a Bull Rush".
Then I look at the rolls, and interpret the results. Then I proceed to describe the outcome of their actions, filling in some colourful detail (like gushing blood etc.), and the fight goes on.
That way, we had a real movie-like fight right in our first gaming session. I described it in a thread on these boards. I was really pleased how well it worked. It was all so fluid and felt so good, I was more than happy to bend a rule here and fudge a roll there, in order to get a great cinematic combat scene. =)
Of course, the drawback here is that I always have to find out what game mechanics covers the intended plan, and to keep things fast and fluid, I can't look everything up in detail, so I sometimes make mistakes. But so far, everything has worked out fine, and by the time, we'll all get more proficient with the rules.
