Indeed #3. Not only would it be awesome eye candy and accomplishments of the guild but it would help with the city population. Sometimes Stormwind and Orgimmar are so high population that it can bog down the not-so-awesome computers causing annoyance for the player. And we know there's about 50 players standing and doing nothing but talking in trade.
For a Hall I would love to a guild vendor with repair at least though an awesome addition would be a trades good vendor. Plus basic crafting needs such as a forge and anvil. Perhaps rested too. Giving enough benefits of a city without taking away from the cities.
Just designing the Hall would be interesting; like a Dwarven hall with kegs lining a wall, a Troll hall with wall carvings and much more. Now for decor, I'd imagine it would best for things to be shown for guild achievements and level allowing for guilds to add their personal touch. Or I dare say archaeology. I'll admit I'd be the sucker would do that profession constantly if meant I could display a proto-drake skeleton in a hall for my guild to see and that would be the ultimate thing to hang from the ceiling.

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