On my mill/drill, I have BOTH types of setup. I originally put the encoder on the end of the ball screw as I was unsure of how much reduction would be necessary to make it work effectively. By putting the encoder on the screw, I would not have to make any configuration changes if I changed pulleys. Another factor was the servos did not have extensions on which to mount the encoders. The X axis still has the screw encoder. The Y axis was moved to the back end of the servo and in my configuration, this protects it from swarf and especially coolant as it is under the mill.
With a properly setup belt drive, there is no backlash in the belt so it will not hunt anymore than if it is on the servo. Also remember, you will be able to use a higher count encoder if it is on the screw as there is no reduction factor to take into account.
Point is, either will work. It depends on how you design the system.
Art
AKA Country Bubba (Older Than Dirt)