Open vs. Closed Hole Flutes

Open hole is properly called "French" and closed hole is properly called "plateau". 

As is obvious when you hold them, the French keys have a hole in them where your fingers go and the plateau do not. This makes finger placement on a French model essential since not completely covering the hole will result in the note not sounding. 

Some teachers (and many students) seem to think that a French model is essential if you're a "good player." Reality is though that it's nothing more than a matter of personal preference. There's no difference whatsoever in the sound (with the exception that you can do some neat 'tricks' with an open hole.) 

This perception though has made it so that the very best flutes out there are made with French keys - so, it's been self-fulfilled that the open holes become essential. 

What's most important is the composition of the instrument (wood, gold, silver, plated) and various "extras" such as 'inline G' or 'split E'. 

Almost all of the tone quality of your flute comes from the headjoint. A top quality headjoint can make an incredible difference in even a medium quality flute. That's why some of the best headjoints are over $1000 just themselves (Drellinger, Goosman, Bigio, etc...) 

There's a difference in playing a French flute because your hand position has to be exact unless you plug the holes (which many students do) but that negates having open holes altogether. The difference in tone quality is usually completely attributable to the fact that better quality instruments are made with the French system.