I'm going for the second option, because if it was the first, it would take, like, some sort of weird paradoxically proactive laziness to simply avoid having Gray say Jack's freaking name.

This is obviously what happened, with Jack saying many ironic things about having heard from the best of sources that Mr Jones is the finest tailor alive. Then he can drop hints in Ianto's direction about how awesome his dad was. Preferably during sex, because that is precisely the kind of sense of timing and propriety that Jack possesses.