According to the "Solidworks 2013 Bible" (page 1123), it appears that, by choosing FEATURES, you also convert the sketches, as well as the body.
Is this the main difference (carrying the sketches over), or is there still another difference?
I would guess that Features tries to bring in the features in the feature tree. If so, then that would be the first choice if you want to modify the body by changing the way it was built, as opposed to adding new features or using direct modeling commands. Importing it as a Body would probably be better if you don't need to modify it and would also be good in case the Feature import fails or has lots of errors.
I have no experience with importing Inventor models; as I said, it is just a guess.
Ken Whitcher wrote:
... you are given a choice between FEATURES or BODY....
Can you attach screen shot of this dialog showing "choices"?
I can run a test later, but it sounds to me like translation of any other format - run Feature Recognition or don't run FR.
(there will be no actual translation of the source sketches/features)