Should I upload images to Cloud Firestore or Firebase Storage?

The Cloud Firestore "Usage and limits" documentation states that the "Maximum size for a document" is 1 MiB (1,048,576 bytes).
This is a small amount of data for images and will only allow to store low resolution images in single documents. You could store images across multiple documents as a workaround, however, that is unnecessarily complicated and Firebase Storage solves this issue perfectly.

Additionally, you will be downloading the whole image (whole document) when listening to any change in a document. If you have a document that has an image (base64 string) and a likes (int count) field and you try to listen for real time updates of the likes, you will be downloading the full image every time client side.

Firebase Storage is therefore most likely what you are searching for as you can store objects of any size (as large as your capacity), it provides you with download URL's, and you do not have to handle any encoding or decoding (although Cloud Firestore allows blob's, i.e. byte data, as well).

There are no benefits for storing files (as binary data) on Firestore, over Firebase Storage.

Firestore is billed mostly for reads writes and deletes, with a monthly free storage of only 1 GB !!! This can be a serious pitfall if not done right. Read How we spent 30k USD in Firebase in less than 72 hours.

Firebase Storage is by far the best option to store files, with nearly no file size limitation and with much cheaper prices, then simply save the files url's to Firestore and you are done.