Cortez The Killer: I'd go for an upright for fermenting (as it's hardly ever on) and a chest for a keg fridge
Spot on. That's what I have now. Upright fridge is great for fermenter access and (in my setup) gravity filling kegs. Chest freezer is efficient at keeping kegs cool and cost next to nothing to run.
However there is nothing super wrong with a couple of fridges either. Easier to access and fit taps to if you want. Just not quite as good on the power consumption front.
BungalowBill: Can you have a fridge to do both with the aid of a fridgemate, brew then condition and then drink?
Yes as long as you don't want to drink and ferment at the same time. Even if you have room for the fermenter and the kegs, your fermenting temp does not generally equal your dispensing temp. I made do with the brew then serve approach with a single fridge for a while. But eventually you'll likely want a seperate unit for fermenting and one for serving.
Katie: What I really want to know which works better.... Are there any problems with converting the freezer to a fridge?
Not really. Just add a reliable thermostat to control the temp. I use the mash master fridge mate. They don't require any mods to the fridge/freezer and basically just switch the power on or off based on your specified temp. (Note that on my fermenter fridge I use one fridge mate to control the fridge power and a second fridge mate running in heating mode to switch a heat pad on or off)
If you want to serve beer out of a freezer with a tap, you generally either put a font in the lid (bit of a cooling issue in hot weather if you ask me), or add a collar and put taps in the collar. Freezers have cooling coils in their walls so drilling into them is not recommended. On a fridge you just drill into the door and mount the tap there (it's just plastic and foam). I have also seen people put taps inside the freezer hinged to the lid (open the lid and they are ready to serve)... or mount taps or fonts on the back of the freezer with beer lines running out the freezer seal (no collar, no drilling).
Most people also add a small PC fan at the top of a freezer to circulate the air inside periodically. Stops layers of temps forming in the freezer (and specifically if you have a collar... stops taps at the top, and the beer in them, staying warm). I just wired a salvaged PC fan to an old phone charger and I run it on one of those timer switches. If you aren't installing taps you might be able to skip this.
I reckon it basically comes down to preference for cooling efficiency, ease of access (lifting a full keg into a chest freezer on your own is not super easy... nor, i imagine, accessing a fermenter in one), desire to mess about with collars and the like if you want taps (fridge is a bit simpler)... and of course what you can get a hold of. Old fridges are more common than old chest freezers.