Unity gain--where the PCM-M10 is not amplifying or diminishing the signal--is at about 4 on the volume level knob. So ideally you'd want to leave the knob at 4 and, running through Line-In, use the preamp for any further gain, since the preamp is giving you a higher-quality single.
In practice, though, you can probably adjust either one--depending on what's more convenient--and get good results.
My general guideline when recording with the PCM-M10 is to have the green lights (not the red ones) flashing occasionally, at the peaks of the concert's volume. I use CA-14 through a battery box--more or less the same as a preamp turned to zero amplification--into Line-In, and generally find that for a loud show I want the volume knob at 6. You'll probably find settings on the preamp and recorder that generally work well for you.
You also asked about cardioids and omnis. An omni is supposed to pick up in all directions more or less equally--front, back sides. Imagine a sphere radiating out in all directions from the mic.
A cardioid mic is directional--it picks up sound in front of it and ignores (at least most of) the sound behind it. Cardioid means heart-shaped. If you imagine the mic at the point of a valentine heart, what it's picking up is the sound in front of that point, spreading out like a heart spun in 3 dimensions.
Here are some images of that.
https://www.google.com/search?q=cardioid+pickup+pattern&tbm=isch&tbo=u&source=univ&sa=X&ei=wU2QUfSAJYGW0QHV74CYCQ&ved=0CEUQsAQ&biw=1030&bih=595So if you are in a room that sounds wonderful to your ears, which are closer to omni, then you'd want omnis to recreate your listening experience. If you're in a situation where you need to focus forward--that is, where the crowd behind you is talking a lot or there's noise from the bar, etc., then cardioids might work better to make an enjoyable recording. Some people like to stand close to the PA speakers and point cardioids directly at them.
You'll have to do some trial and error. Maybe bring along both pairs and record parts of the same set with each one and see what you like best. I tend to go omni, but the rule is...there are no rules.