She does both. The commercial kind comes all chopped up in flakes. If I put a little pile of it in a dish...well, more likely a plastic snap-on lid..she'll chomp on it for a while. If I put it on the carpet, she'll roll in it. I've got a Ziploc bag of commercial catnip that she likes to lie on.
Interesting... if she were out would she nibble or lie in the plant? I'm thinking about whether I should plant some here.