With the K&N intake or any other open air intake like volant, KKM, MAC, etc. the warm underhood air is what's being utilized by the engine.
With Zabteck's "CAI", you would need to cut into your fender and route your intake through there.
The cooler outside air (not warm air from under the hood) is received through the front passenger side fender, thus making it a "true cold air intake". I would like to get one....but I hate the blue!
Either way, as far as performance is concerned, upgrading to any aftermarket intake kit is way better than the stock set up.