It depends ... generally indents, with maybe a little extra spacing between paragraphs, but I grew up reading fan fic, where generally you had the extra line between paragraphs. So, for "real" fiction, I don't prefer spacing, but for fan fiction, I do.
Of course, the line is blurring with that now. I've turned some of my fav fics into epubs, and some of them read better without the line spacing.