I love the fact I play by "ear" too, although sometimes I wish I paid more attention during "A" Level music so I could read as well..........but if I had to choose, playing by ear, to me, is more natural.
I play virtually everything in the key of "F", and can play most songs quickly without much thought in this key, however if I am to play in another key, I actually have to learn the song.
Transpose was a wonderful invention

Although it can lead to laziness, with me being a prime example.