Yeah, it really is a "lesser of two evils" situation.
Forcing everyone into a dream world isn't a very nice way of achieving peace. But I also don't think the stone should be destroyed. It would be like if the Red and Blue Orbs were destroyed because Archie and Maxie unleashed global disasters by awakening Kyogre and Groudon. I also don't imagine Darkrai would be too happy about its stone being destroyed, so it might go on a rampage and put people to sleep anyhow.
When I first played the game, I went with Shiv without a second thought. Nova was trying to manipulate the player into not trusting Shiv by bringing up his past, but Shiv actually regrets neglecting his brother. Nova did make a strong argument in episode 3 though, about "life is what we make it" and changing reality to being better. Although again, it's questionable whether forcing everyone in a dream world would make it better. If the dream world doesn't have any ice cream, I don't want to be part of it.
Shiv's flaw is that he thinks we should accept things the way they are, even if the way they are sucks. Nova's flaw is that she thinks she's a hero, but so far has actually caused more harm than good through her followers.