XML Formatter is the default XML Serializer in WCF present in System.Runtime.Serialization. But one can go ahead and use XMLSerializerFormat for serialization for which a reference to System.XML.Serialization.
As practice service oriented progrsamming is commonly called CONTRACT FIRST Developement. Thus to begin the development, platform independent representations of datat that need to be exchanged is defined. Thus as a developer one starts concentrating on defining the data exchange formats by defining schema for the formats and further gets into how the data needs to be represented in XML making XML fetish.
Thus as a rule of thumb XmlFormatter i.e. the default serializer must be used as it not only restores the focus of developers to what is important to them i.e. specification of inputs and outputs, but also relocates control over the represntation of data outside of code, which can be controlled by encoding protocol in binding of the endpoint.