What should I consider when choosing a Mealy or Moore state machine design?
First consider the output behavior specified by the lab handout! Here are some other things that you may need to consider as well. Often a Mealy design can be a little more compact than a Moore design, because multiple output levels (0 or 1) can be generated from a single state. Typically in digital systems, Moore designs are preferred, because everything in the system will then change on a clock edge, this makes timing easier to characterize and deal with. In a Mealy system it may be difficult to guarantee that your outputs are asserted for the required time, since they are directly dependent on the inputs. In a mealy design it may also be difficult to guarantee that you are meeting internal setup and hold times.
