Why 'either', 'or'? Why not both?
I think K9 has been an asset to Doctor Who, but at the same time he'd be annoying in larger doses. Appearing in School Reunion worked for the sake of nostalgia and the story did a great job at making it work convincingly. His appearance in Journey's End was a nice little '...and there's the kitchen sink' kind of moment and it was great to give him that little moment.
His appearances in The Sarah Jane Adventures: Series 1 were similarly very good. A brief cameo in the pilot and then arriving to save the day in the finale worked a treat. Having the dog on board as a regular character in Series 3 did no favours though - I believe it was a contractual obligation to include him in every story of the series which ultimately proved less is more, and then he was carted off with Luke for Series 4.
As Series 5 intended to show him with Luke at Oxford, I'm content in my head to imagine that that particular iteration of K9 stays with Luke and intended interest Sanjay... it's off-screen, I don't need to see it, but like Sarah Jane herself all those characters are still out there doing as was intended before Sladen's untimely passing.
There's no need for K9 in Who proper now though... he's a nostalgic nod but that's really all he can be in that guise. That said I feel the show is overdue another past-companion return. Either bring Jo Grant back into the picture following her SJA appearance, or someone else... the School Reunion idea, but maybe play it a bit differently.