Agreed. This appears to be the most best, and also most resilient option.

God forbid you run into issues with your outside social circle, you've still got your work circle, and the other way around.

I've only had option #1 happen once, and it was when I encouraged a few friends to apply at my company, and even then, it didn't really merge the social circles, I just had some people which were in both. I wouldn't do it again, either.

It's great to have multiple groups of friends, they don't all need to be related through work.