i believe chronological is more appropriate for business school applications.
in fact, the expanded resume required at u of chicago almost forces your info to be laid out chronologically.
also, during my interviews at kellogg and GSB i was asked to walk the interviewer through my resume - they wanted to start w/ my education and move through my career path, etc. this would have been quite difficult if i had used a functional resume.
you're not looking for a job here ... you want to emphasize a strong career, accomplishments, and advancement.
just my two cents ....
hope you're doing well.