Best Method to pause a Thread?

I have a Runnable class which performs an operation continuously in its run method using an infinite while loop. Sometimes a user might want to pause/resume the operation. What is the best method to pause the Thread. I have two thoughts:

FIRST

class Foo extends Runnable {
    @Override
    public void run() {
    while(true) {
        if(pauseFlag)
           try{
              Thread.sleep();
           } catch(InterrruptedException ie) {//...}
    }
}

SECOND

class Foo extends Runnable {
    @Override
    public void run() {
        while(true) {
            //pause if user wants to pause
            while(pauseFlag);
        }
    }
}

• In the FIRST case, when i use Thread.sleep inside loop the Netbeans IDE issues warning not to use Thread.sleep inside loop. Why is that?
• In the SECOND case, when i use infinite empty while loop, is that a performance overhead?
• Which method(mentioned above or otherwise) should i prefer to pause the action being performed by the Thread according to the users choice?

Because it has nothing to do with synchronization, i do not want to use wait/notify.