I prefer to set my largest and most powerful turrets to Selected Target mode because that allows my ship to track and shoot other ships without having to turn around too much. Also, that way I can focus firepower more accurately on one ship/turret/thing while I use the mothership cannons to deal with something else.
Meanwhile, smaller turrets are set to automatic targeting - so if an eney ship gets too close, they will open fire. So I can fight at least 3 different ships at the same time. Or 1 with a LOT of firepower. Or I can just sit 2km away from any targets and blast away at the hapless defences.
Neutrals that attack you become your personal enemy, so in theory auto turrets should attack them IF they attack you first (or you choose to attack them as the case may be).
The only thing to really keep in mind is that with Selected Target mode, you CANNOT highlight ANY ship without attacking it. So you will have to navigate sector-to-sector and won\'t be able to fly directly to your friends ships by simply selecting them in the Nav.
But all of this depends on the purpose of your ship and what you want it to do. I do it this way because I prefer really large and slow turning ships. It\'s jsut easier to track other ships this way. Also, it allows me to SELECT and prioritize targets, so my turrets won\'t be swarmed by hordes of fighters while I\'m being pummeled by a Battleship - I can keep focused on the largest threat.
Let us know what you want to do with your ship - that will help you decide more than anything ^^