Most people fall into #2. Further, I found that many if not most of the engineers there are foreigners on work visas. Many are not that motivated or very good, and they are most concerned with playing politics and entrenching themselves so that they can stay on their work visas. This has helped to create a culture surrounded with politics and bureaucracy, even more so than other large companies I had worked for beforehand.
The Google name still has a lot of prestige attached to it, especially outside of the Valley. But word is getting out in the Valley about what a mess the company really is, and it's only getting worse.
I would go with a smaller company. You'll learn a lot more.