Tier 1 G, Dependent, Now Main App ILR, UK Born Baby National

Hi Everyone
Please read through the final timeline.
Story so far:
I (main applicant) got Tier 1 General visa in Apr-2011 was valid till Apr-2013 (first leg for 2 years)

Got married in Jan 2012 - wife got visa in Jul-2012, was valid till Apr-2013

We both got second extension in Apr-2013; was / still is valid till May-2016 (second leg for 3 years)

Our baby born in the UK in May-2013

I applied for ILR (on the basis of Long residence) in Nov-2014, got ILR in Mar-2015

Applied for baby's registration for UK citizenship in April 2015, got it in Sept 2015.

Future planning:
I’ll be able to apply for UK Nationality in Apr-2016 (our baby is already a UK national).
Now only wife remains on a visa which requires extension in May-2016.

Please correct me if I’m wrong:
Option # 1: Apply as Tier 1 G dependent, meet all the points as mentioned in the last extension.
Option # 2: I heard that now on the basis of my, around 3 years old in May 2016, baby my wife could apply for ILR.

Please advise, if No 2 above is right or what should be the game plan for my wife’s visa? What that visa is called?

Kind regards.
Ali

Unfortunately, it's FLR(M), 5-year route prior to SET(M).