I think that while Option 1 is preferred and good, in the long run Option 2 might be more beneficial. As Phase 1 rolls out there will be lots of new people learning of it and starting to play and as a result more people might get aware of ESF and might want to pitch in to help in toward the full Phase 2 release, effectively increasing the team size in terms of bug reports , testing and MAYBE even acquiring new team mates that were previously unaware of ESF to help development. Option 2 would also give you a period of quietness where people will stop asking about it but depending on Phase 1 quality it might make people very winey instead...
At the same time Option 2 can go wrong and be regarded as an Open Beta. I think if bots would be included in Phase 1 and it would somehow be made more stable like without having crashes when Beam Struggling and such like Open Beta had then it could be a success. So I guess what I'm saying I think you guys should concentrate on eliminating bugs for the moment and then releasing a fairly stable version as Phase 1 and Phase 2 would just expand on the characters, maps, modes etc.