Having light colored/white shades or blinds will reflect a lot of the heat back out when they are drawn closed (while the sun is directly on them). You might also look into using window tinting (just like they tint car windows).

If they are meant to be used then add 2 inches to the height of the window and divide the window size by 2 and add 2 inches to that.

I concur with Dan that it is better insulation. However, I suspect Dan would agree that when you throw in the cost-effective side of the equation, the size and type of project might dictate which option is best. Tim