Dive Junky:
gehadoski, I think your friend may have confused the whole balanced, unbalanced issue with upstream and downstream issue.
Downstream regs will malfunction with a freeflow, where as upstream malfunction closed. Best solution to any problem is annual maintenance.
This is partially correct with regard to the most common type of failure, but there is more to it than that.
If the first stage seat fails and causes the intermediate pressure to become excessive a downstream second stage will vent the excess pressure through the second stage and a freeflow results. Normally this is only a very slight freeflow that does nothing more than vent the extra pressure, unless of course the seat has catastophically failed which means a big freeflow.
On the other hand, an upstream second stage design will not vent the excess intermediate pressure from a failed seat, so either the first stage or the LP hose itself must incorporate an overpressure relief valve. In my opinion, an OPV integrated into the second stage hose fitting is preferrable as you are more likely to observe the leak than if it were mounted on the wirst stage. This is the approach used by Poseiden, and Poseiden is I believe the only manufacturer still making an upstream second stage design.
But even though the upstream second stage will not vent the excess intermediate pressure, you will still be able to breathe off it in a normal manner. So in essence both designs will deliver air following the most commonly encountered first stage failure.
For nearly any other type of failure, there is normally no difference in how an upstream or downstream design will impact air delivery after the failure.
So in short the only meaningful difference froma failure perspective is that an upsteam second stage requires that some type of OPV be used in the system to deal with the excess IP. Poseiden incorporates them in the hose, which is a great idea but it means much more expensive hoses and more limited hose and hose replacement options.