Yes and yes. Separate DB's / customer with separate DB's / module. Much more configurable and flexible. With 2K5, I might even suggest multiple instances - one / customer with each having their own setup. Sure, a bit more to administer but it would be an added layer of flexibility / security.

Keep in mind, though, that there are *always* chances for security breaches. especially since you have users that need to see multiple customers' data. Best bet is to have multiple checks in place and not rely on just one method.