Which purchasing option is best - Free+IAP or paid?
I followed up with a couple of developers of such apps that provide these two purchasing options.

It turns out that the sole reason that a second standalone purchasing option is offered (rather than just sticking with a single app with an IAP) is for those people who use Family Sharing. 

As I alluded to in my question, IAPs don't work across Family Sharing so purchases that way wouldn't be reflected across all the devices you share. 

If Apple didn't have this restriction, then a single free app with IAP would work for everybody - however because they do, then it doesn't.