What is the difference between including private functions in a jQuery plugin in the examples below:

Outside the loop:

    (function( $ ){
      var defaults = {};

      $.fn.cmFlex = function(opts) {

        this.each(function() {
            var $this = $(this);
            //Element specific options
            var o = $.extend({}, defaults, opts);

            //Code here
        });

        function f1(){....
        function f3(){....
        function f2(){....

      };
    })( jQuery );

Inside the loop:

    (function( $ ){
      var defaults = {};

      $.fn.cmFlex = function(opts) {

        this.each(function() {
            var $this = $(this);
            //Element specific options
            var o = $.extend({}, defaults, opts);

            function f1(){....
            function f3(){....
            function f2(){....
        });     


      };
    })( jQuery );

The advantage of including the functions in the loop is that i will be able to access the $this variable as well as the Element specific options from f1() f2() f3(), are there any disadvantages to this?