So much depends upon the personality of the child.
When I was a kid, I was pulled out for reading with the class 2 years ahead, and it was definitely a good fit for me. But then, I was always a bit of a social chameleon (in a good way), and so the social thing never bothered me. I had friends in both grades and the one in between.
I don't know whether a grade skip would have been better for me or not, of course, but the subject acceleration was fine. More challenge would definitely have been an improvement, but I'm not sure a grade skip would have accomplished that any more than subject acceleration did. I think I'd have needed a different curriculum altogether to get that, and that just rarely happens in public school. It sure didn't happen in the 70s/80s in public school!
Personally, I think you're asking a question to which there is no right or wrong answer. Some kids do better with a grade skip and some do better with subject acceleration. You just have to think about how your particular child does with agemates and older kids, and make your best guess.
<shrug>
I'm sorry that I'm not more help...
