The microwave gun is better for single targets in my experience.
Burn damage can make large zeds panic and get them away from allies, but this can also make them hard for sharpshooters to headshot, and you also still don't do much damage to them. The flamethrower is generally better for trash clearing, as you can set large groups of enemies on fire quickly and easily. I actually haven't played firebug since it got nerfed (or is that patch still in the works? Either way.) but here's the functional differences between the flamethrower and the microwave gun.
