Its a bit subjective, but I prefer option 1 - asking for payment before giving the option to choose your 'product' seems a bit off putting to me. Alternatively, how about a first form with all the event information, on which they select their event, then clicking submit takes them to a second page for all three payment options. If they choose paypal it takes them to paypal from page 2, otherwise it sends the emails and says thanks?
And yes, I had a look at the URL you posted, and it does look like a rather unfriendly way to select payment at the moment.