In the current implementation of CPython, both will generally immediately close the file. However, Python the language makes no such guarantee for the second one – the file will eventually be closed, but the finaliser may not be called until the next gc cycle. Implementations like Jython and IronPython will work like this, so it’s good practice to explicitely close your files.
I’d say using the first solution is the best practice, though open is generally preferred to file. Note that you can shorten it a little though if you prefer the brevity of the second example:
def file_get_contents(filename):
with open(filename) as f:
return f.read()
The __exit__ part of the context manager will execute when you leave the body for any reason, including exceptions and returning from the function – there’s no need to use an intermediate variable.