Well from what I can see I wouldnt bother cutting into this mesh at all. I would just place a cylinder there, make it so that it has a hole in the middle. Then make a smaller cylinder for the button and place it inside. Move them so that they intersect the phone model. The amount of cutting and messing around you'd have to do to get the mesh correct with the other way is simply not worth the effort. Unless you're going to be right up close to it you'll never see the difference.

Alan