Steel pool vs gunite pool which is better?

Yes. You will lose an average of one foot on each side of the pool because of the thickness of the gunite wall. My recommendation is to check the referrences of the contractor. Make sure they've done this kind of work before, and ask to see one, or more, of their conversions. Also, the costs involved are about the same as having a new pool installed... you're not saving a significant amount of money just because you already have the hole in the ground. Good Luck.