To spend time would sound more personal. While hang out is more (informal, youger people would say it more often). But for me the two are interchangeable. They have the same meaning and people would understand you which ever option you chose to use.

If I am "hanging out with friends" I am probably just going to grab a drink or see them in a casual setting. "Spend time with friends" has more personal meaning. If I am going to "spend time with friends" I might go over to their place for a long dinner and conversation. Hang out = more casual; spend time with = more intimate. I hope this helps!