Anne Maria, it's definitely a pickle! When I get an inquiry from a guest who meets my booking requirements I can opt to block those dates for 24hrs. If they do not meet my booking requirements the dates stay open until I approve the booking. In either case, it's important to message the guest in your first repsonse about those dates being left open for others to book.
If you cancel on the second guest who made the reservation you risk being penalized for that cancellation. Also consider that the first person may be only inquiring, the second actually wants (and did) book.
happy hosting!