The reason I chose the first example over the second is that, if you only ever specify padding-bottom for example, what are the default values for the other unspecified padding properties? This is why we have the CSS reset technique and normalize.css (more hackery).
I would make it mandatory that you declare all four values for the padding rule to remove any ambiguity. That would also mean eliminating shortcuts like
padding: 5px 10px 15px;
padding: 5px 10px;
I think having shorthand rules just adds to the ambiguity and complexity of CSS, because, as you rightly point out, each of the variations has a subtly different meaning from each other. This is not a good thing (in my opinion :-) especially when you consider how lengthy and complicated stylesheets are nowadays for many websites.