ASP.NET 3 TIRED APPLICATION Webservice Vs Stored Procedure

Hello Experts:

I am designing a internet facing website that will access data from our sql server database and display it on the web.

There are two machines
MACHINE A is the webserver. It  has IIS and it is facing the internet.
MACHINE B is has SQLServer 2005 Database.
MACHINE A AND MACHINE B ARE IN THE SAME FACILITY.

Option 1:
(A) Install WebService on MACHINE B.
(B) Web Server(MACHINE A) will call webservice.
(C) Webservice will access SQLServer database and return data.

Option 2:
(A) Do not install webservice on MACHINE B.
(B) Web server directly access SQL Server database on MACHINE B exclusively using ONLY STORED PROCS through Data Layer. ( just like in 3 tier application )

Question:
(1) Security wise which option is better. Option 1 or Option 2 or are both equally vulnerable.
(2) What are the relative advantages / disadvantages of both the method.
(3) What method would you recommend?
(4) What is the general industry trend?

THANK YOU FOR ALL YOUR HELP.