The very definition of a sitemap is a hierarchical index of your website. So its only obvious that the best method to follow is to use the same hierarchy your site and its pages use, to maintain a logical consistency and to make it easier for bots to index your site. So, if have a site that has two sections say games and Downloads, then it makes sense to organise it this way
Code:
Home
Downloads
-System Tools
-Multimedia
-Internet
-Utilities
Games
-PC
- News
- Downloads
-PS2
-XBox
-GBA:SP
Sitemap
Contact Information
Plus, its not right to make your sitemap your index page. It makes for crappy design and is just not right. The best thing to do is to include a prominently visible link to your sitemap (preferably called sitemap.html) and let the bots do their job. If you do this, you would have absolutely no need to make your sitemap page your home page.