Both direct property access (localStorage.foo or localStorage['foo']) and using the functional interface (localStorage.getItem('foo')) work fine. Both are standard and cross-browser compatible.^* According to the spec:

The supported property names on a Storage object are the keys of each key/value pair currently present in the list associated with the object, in the order that the keys were last added to the storage area.

They just behave differently when no key/value pair is found with the requested name. For example, if key 'foo' does not exist, var a = localStorage.foo; will result in a being undefined, while var a = localStorage.getItem('foo'); will result in a having the value null. As you have discovered, undefined and null are not interchangeable in JavaScript. :)

EDIT: As Christoph points out in his answer, the functional interface is the only way to reliably store and retrieve values under keys equal to the predefined properties of localStorage. (There are six of these: length, key, setItem, getItem, removeItem, and clear.) So, for instance, the following will always work:

localStorage.setItem('length', 2);

console.log(localStorage.getItem('length'));

Note in particular that the first statement will not affect the property localStorage.length (except perhaps incrementing it if there was no key 'length' already in localStorage). In this respect, the spec seems to be internally inconsistent.

However, the following will probably not do what you want:

localStorage.length = 2;

console.log(localStorage.length);

Interestingly, the first is a no-op in Chrome, but is synonymous with the functional call in Firefox. The second will always log the number of keys present in localStorage.

^* _{This is true for browsers that support web storage in the first place. (This includes pretty much all modern desktop and mobile browsers.) For environments that simulate local storage using cookies or other techniques, the behavior depends on the shim that is used. Several polyfills for localStorage can be found here.}