Gerrard is the better player, but if I were a manager I'd chose Xabi first.
I just love that type of player and think that such deeplying playmakers with his combination of skill, intelligence and defensive awareness are almost unique. Gerrard, in terms of how much he could do on the pitch is even more rare as an individual, but in his best position (attacking central midfielder/second striker imo) there are more players who can have a similar impact than it is in the role Xabi plays. You've got Pirlo - although he isn't nearly as good defensively - in the last 10-15 years, but practically no one else (not counting the likes of Xavi and Scholes who usually played a bit further forward).