I'd prefer to hollow out a nickel-iron asteroid of reasonable size leaving at least a mile thick shell to solar block radiation, toss a bunch of ice in it, cap the ends, heat it up and introduce a spin. It would be like a small city after a few generations of growth and building. In case of over population or political differences, they could simply start a colony asteroid of their own. There's plenty of raw materials for the taking out there, and without the gravity well of Earth to hold you down, much of it would be easily accessible. Planets are nurseries for infant races.