well, is it a question? I guess you answered yourself. Yes, you can use both targets (ARMI and THUMB). Which one to choose generally depends on the type of application you are writing (need of smaller or quicker code).
Simply said, ARM (RISC) processors are 32-bits based, but some of them are able to use 16-bit instructions.
When you use ARMI target it creates "normal" 32-bit application, when you use THUMB it uses that 16-bit stuff. It means that the code is more dense (smaller application), but the processor has to translate these 16-bit instrucitions to 32-bit, so the code is a little bit slower...
For more information please see http://www.arm.com