I opted for hardware driven sleep mode (SM=1) in the XBee. I felt that that cyclic sleep mode (SM=4) to be a pain to setup. I felt that that keeping the XBee asleep for extended durations, the device would be MIA from host. With a hardware based sleep, I could use a swith to to force it awake, configure remotely with the software tool I wrote, flick the switch back to the timer based sleep. Simple in my mind.