It depends upon what one is looking for. At some schools, honors status really makes little difference in the academic experience. Sometimes it comes with an honors dorm, which may have less of a party atmosphere (in my kid’s experience, not the case), priority in class registration, access to smaller sections.
But when it comes to name recognition, having been admitted to the honors college at a less selective school really doesn’t mean much. So if one is choosing based upon prestigious reputation, better to go with the more selective, prestigious school than with the honors college at the less selective school. Usually, honors college comes with some merit money, which often makes the choice clearer.