Citing papers with newer arXiv versions
I think best practice is to include the arxiv identifier for any paper you cite anyway, so the bibliography will include both the publication info and a link to the arxiv.  In that sense you don't have to choose just one.  If it's say in the introduction and you're writing "The stabilization hypothesis was introduced in [BD]" there's no need to specify which version you're referring to.  However, if you want to refer to a specific theorem number then you might want to clarify if the numbering disagrees in the two sources.  Similarly if you want to refer to something that's only in a later revision then you have to be clear.  So you could say "Theorem x from [BD] (which appears only in the arxiv version) says..."