exegesis and hermeneutics

i've been reading st. augustine's confessions for what seems like months and months, and in book XII, section 18 he brings up a question that some friends and i have been trying to answer lately. when we interpret scripture, is it more important to understand the historical context and original meaning from the original author to the original recipients (exegesis); or is it more important to apply it to our lives now (hermeneutics) and to try to hear what the Spirit is saying through the passage to our contemporary lives, through a more allegorical interpretation.

considering any particular passage augustine says "how can it harm me if i understand the writer's meaning in a different sense from that in which another understands it?" and further along he says "...what harm is there if a reader believes what you, the Light of all truthful minds, show him to be the true meaning? it may not even be the meaning which the writer had in mind..."

i lean further to the side of exegesis, but i do think the Spirit speaks in mysterious ways to our current circumstances as well.