I recently had to make a similar decision. After closing a deal to sell 39% of our company to Private Equity, I was given the option to choose 6,000 stock options or 6,000 shares of stock. Most were not given the option, the majority got stock options, and a few were offered stock.
With the options there was no out of pocket expense and the strike price was set at the current market price, based on an official valuation. Any gains by going this route would be taxed at ordinary income tax rates, which for me in California would mean at least 12.3% state tax and 39.6% federal tax, and 3.8% federal net investment income tax (thanks Obama Care). So gains would be taxed at ~55.7% (taxes are just an estimate).
With the stock, I would be required to contribute 35% of the value, and the company would loan the remaining 65% at a 1% interest rate (that would just be deducted from the proceeds during next liquidity event). In this case the 6,000 shares were worth $50/share or $300,000. Therefore I would have to put $105,000 of my own money in the game. The benefit would be the gains would be taxed at long term capital gains rates. This would equate to a 20% tax rate federally (based on our income bracket) and 12.3% for state taxes (~32.3%).
I chose to go the equity route and cut a check for $105,000 in return for much lower taxes on future gains. Of course I took on risk as a trade off, however the loan from the company is non-recourse, so no risk beyond my initial capital contribution.
Options or Stock both vest over 4 years at 25% per year.