You should be able to heal perfectly fine as a shadow priest, from your very first instance up until 70. If you cannot, then I would imagine your problems are any of the following:
(1)a lack of mana pool,
(2)massively outdated gear,
(3)mistimed heals resulting in too much overheal, or
(4)a tank that doesn't know how to sufficiently hold aggro.
I simply see no reason to abandon shadow if you are enjoying the playstyle. You should be able to heal instances with no problem. Also, if your intent is to respec and heal at 70, you will have a few tools to make it easier at that point. I've leveled two priests to 70, shadow all the way. I would estimate that in my instance runs from 1-69, I was the healer 70% of the time.
You inquired about the differences between the two builds. The differences are exactly what you would expect. Putting points in holy will increase the mana efficiency and power of your healing spells, as well as reducing cast time. However, having these benefits is generally regarded as superfluous until you reach post-70 content.
The greatest benefit to rolling shadow to 70 (aside from the fact that it makes solo questing effortless) is that you can fill two roles. If a group already has a healer, you can DPS/support. If the DPS slots are filled, you can heal. Sure, as a holy build, you could play the role of smiter, but be assured that almost any DPS class/spec will be chosen first.
In summation, yes, let me cast another vote for rolling shadow to 70. You don't have to do it that way, but it will make your life easier.