What is the best way to use OSM data in QGIS

I think there are three broad options for visualising and manipulating OSM data in QGIS:

1. Directly with OSM XML files (i.e., using the very dated plugin). This still works if all ids are in the 32-bit domain. A suitable workaround is to load the XML into JOSM, copy everything into a new layer (therefore resetting all ids) and save this as an OSM file for loading into QGIS. Apart from the dangers of importing the same data again, this is very simple and requires no additional skills to be learnt. Once loaded in QGIS I would suggest creating shapefiles from the OSM layers for further work.
2. Use prebuilt ESRI Shapefiles. The files provided by Geofabrik are suitable for most purposes, but if you need specific tags can be a little frustrating.
3. Import OSM data into a Postgres database. The most useful way is using the osm2pgsql routine which creates tables with a rich set of attributes. As osm2pgsql supports hstore all tags are ultimately accessible. Additionally the base tables can be extended to add additional geometry columns for other projections of interest (such as OSGB). Postgres has a simple installation program on windows, and osm2pgsql and QGIS can be used with little knowledge of Postgres.

Personally I have found the latter method by far the most flexible, as it lends itself more readily to the creating multiple layers both for analysis and visualisation which is QGIS forte. It also provides the best method for reusing QGIS projects and refreshing the data.