Blizzard has done a fair job at balancing the two to make them both manageable in instances. The fundamental difference between disc and holy is the play-style in my experience. Disc is primarily about reacting prior to damage using abilities such as Power Word: Shield and Divine Aegis to mitigate damage before it happens. As a Holy spec, the healer must be aware of the damage that is about to come, and rather than being able to pre-heal the player receiving the damage, they must be able to respond to the damage in a timely manner.
In many boss battles, you’ll know when the tank is about to get beat on with a special ability. This would be the time that the Disc priest would bubble the tank and prepare to also add heals as necessary once the Shield has expired. A Holy priest would begin casting a heal early so that it finishes about the time the damage is done to the tank and managing the Chakra spell to react to whichever situation is most appropriate (group heals or focused-tank heals).
Each spec has their own damage reduction/healing cooldowns. Disc has Power Word: Barrier which lowers the damage taken for everyone in the bubble, and Pain Suppression which lowers damage for the character it is cast on. Holy has Guardian Spirit for increased healing on the target, Spirit of Redemption for 15 secs of healing if you die, and Lightwell which other players click on to return health.
Both priests must manage their cooldowns effectively to keep the tank and rest of the group alive. I’ve healed as both specs in group settings and they are both viable options for 5-mans. It all comes down to what you prefer: bubbles to help take some damage and heals to recover from it or managing your chakras and timing the spells to respond when they are needed.