According to Apple, "Blue is best." The iPhone uses two colors of speech bubbles with text messages in the Messages app to indicate how your text was sent. Blue bubbles represent texts sent using Apple's iMessage service, which is free and uses a Wi-Fi connection, while green bubbles represent texts sent using traditional cellular SMS.
IMessages don't use your 3G, 4G, LTE or SMS quota to send messages, but they can only connect with other Apple devices: iPhone, iPod Touch, iPad and Mac. The iMessage service works in conjunction with Messages, the standard iPhone messaging app, and chooses when to send messages using SMS or MMS over a cellular service and when to send messages over Apple's iMessages service.
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IMessage doesn't work automatically. You need to turn on the service and connect it to your Apple ID for it to work properly. Tap the iPhone's "Settings" app and select "Messages." Tap "Use your Apple ID for messages" and enter your account information. Confirm the "On/Off" slider next to iMessage is in the "On" position, and you're off and running with blue chat bubbles.