which of Pi's stories one should believe and why/
It all depends on one's idea of reality. The story that Pi tells with the animals is how he interprets and feels personally about what happened while the "dry yeastless factuality" version as he claimes it shows on how it would seem if there was an observer looking at the senario. In truth both of the stories have the basic information. The Tsimtsum sunk, he has no idea how the tsimtsum sunk, and that neither story can be proven, so they have to take his word for it. Both stories are true but only one explaines how the merkat bones appeared on the ship, and that is the one with the animals.
Hope this helps!