I need around 80GB for system, dev tools, and other work-related utilities.
I suspect you don't need anywhere as much actually.
virtual machines that we use for testing, and depending on project, they can take quite a lot of space.
If you actually need to to put VM images someone else built on a local drive, there's not much which can be done about that. I assume you're already using sparse files (manually regenerated on a regular basis if need be). In that case compression won't help if they unthinkingly put loads of crap on the images.
These are going to make your laptop noisy anyway, right?
Yeah, I know that people waste a lot of space, and it's one of the reasons why I have 2x2TB drives in my stationary rig at home.
I suspect you don't know half of it. I'm talking about about a different order of magnitude of waste, like the waste caused by a default install which will never come close to the T range, not the more obvious waste caused by keeping random DVD rips around.
However cost-wise option 1 with mSATA SSD wins as it costs the least amount of $$$, and I don't need huge speed for these VMs or games.
Yes, that makes the most sense although I don't think you need 120G. As CA_Steve said, also replace your drive by a slower one if you want less noise.
But don't pray: if you reconfigure or get rid of silly programs, your drive will be able to spin down. If you're running Linux, look into laptop-mode-tools for a reasonable configuration which can keep the drive spun down even if you write some stuff to it.
Are you sure that this OCZ drive is any good though? I'd be wary...