Yeah, given your situation I'd go with the insulation between the joists, covered with cloth approach. If you need more isolation, one trick (From Rod Gervais' book) is to cut some drywall into 16" wide strips (or however much space you have between the joists), and attach the drywall strips to the top of the ceiling between the joists. Doing a few layers of drywall this way (possibly with Green Glue between) will add mass to the ceiling and reduce transmission. Once this is done, put insulation in the rest of the joists and then cover the bottom of the joists with cloth.
Win/win, as you improve isolation (though it still won't perform as well was true 2-leaf, room-within-a-room construction, esp at lower frequencies), and you also improve the sound within the room.