Should I prefer a grad-school recommendation from a PhD holder who doesn't know me well, or an MS holder who does?
Person A. Person B, as a recent graduate, is not really in a position to assess your caliber as a researcher -- he is still settling into his own career. He cannot compare you to dozens of others he has known at this stage of your career. Further, he is hardly in a position to judge your suitability for a PhD program, not having one himself. There is a fairly firm unwritten rule that grad school LoRs have to come from faculty, not grad students or post-docs -- I imagine person B is the industry equivalent of a post-doc. 

You may want to ask Person A if they would appreciate notes or a draft letter from Person B. This is one way to get more specifics into your letter. Another way is to write your own notes and provide them, just to "remind him" about the things you've been involved in. Alternatively, if your school accepts extra letters, you can ask both.