Magento Development Workflow: how to "source control" databases and update the live Magento installation from the Test magento installation?

Options that I am aware of

1.) Manual - in other words repeating your actions manually in the back-end = as you mentioned prone to error, slow

2.) On the database level with direct SQL queries = prone to error

3.) Create an extension which adds, makes changes through sql setup/upgrade scripts. These files are part of your repository and can be deployed. This approach mostly bypasses the UI.

4.) There has been some work going on in trying to make some of this workflow more pleasant in projects like this, but I think it is not quite ready for prime time just yet.

Out of all these options I currently favour 3.)