Have you checked how straight your chainline is or is likely to be yet?

It may not matter what chainring/cog you have if your chainline isn't straight, as you'll be in danger of snapping your chainring or throwing your chain and having bad things happen.

If I were you, I'd probably go with a 3/32 cog, as you can always put a 1/8 chain on a 3/32 cog, but you can't do the reverse.

Make sure your chainline is straight (within .5-2mm), or figure out how you can get it straight (spacers, etc.) - http://sheldonbrown.com/gloss_ch.html#chainline, before spending any more money on parts.