I travelled on both the routes, route 2 i.e via Naran>Babusar is short, better road, more scenic...Its almost 600 km from islamabad, but please keep in mind, in those areas distance doesn't matter, its the travel time which counts. As you may have to drive at 20kmh at some places.
I recommend to skip Gilgit and go directly to Hunza, gilgit will be too hot and nothing much to see.
Regarding the travel time and what are the best places to stop, it depends on following:
How many days you have?
How many drivers/how long you can drive continousely?
If you have kids with you?
How many places you have seen already along the route?
There are too many threads on this same trip and route, I suggest you to go through them, make some notes, plan the the days and stopovers and then share here, so members can review and give their suggestions.