The Blues announced on Thursday that a deal has been agreed for Costa to rejoin Atletico Madrid, with the striker now set to have a medical in the Spanish capital and discuss personal terms with his former club.
Costa refused to return to Chelsea this summer following a row with manager Antonio Conte, instead remaining in Brazil in the hope of linking up again with the La Liga side, and as a result, the Blues signed Morata for a club-record fee.
Despite the 24-year-old Spaniard's promising start to Premier League life, scoring three goals in his first five games, Neville still prefers Costa to Morata.
The former Manchester United and England defender told Sky Sports News: "I would rather have Costa than Morata in my team at this moment in time, to be honest with you. I think he is better suited to the English game.
"Morata is different, he thrives off crosses. Costa you can stick him up there on his own, he will take on the whole of the back four, from the left back to the right back to the centre-back. He will try and bully them all.
"Whereas Morata is a little bit more cute in his movements, he thrives a little bit more on crosses, he keeps it pretty simple outside the box. But the minute he comes into the box, I actually think he is a better finisher than Costa.
"But if you were asking me as a central defender, I would hate to play against Diego Costa, I really would. And Morata is someone who is good in the air, but he has not got that nasty character and streak that Costa has got."
Costa scored 59 goals in 120 games for Chelsea and helped the West Londoners to two Premier League titles.