I vote mergers. With merges, we get rid of a lot of servers through combination which actually helps fix the problem for a majority of people. In most cases they'd have to merge at least 5 servers to get above standard population (somehow single digits on fleet and dk/coruscant is considered standard), but as long as they merge like servers (pve/pvp/rp/rppvp) it shouldn't be a problem for most people.
Transfers don't get rid of servers so it doesn't fix the problem and in fact causes many more problems as the populations will just decline even more on low pop and create even longer queues to play on high pop servers.
Once they've removed at least half the servers, then maybe go to paid transfers, but free transfers will cause more problems than they fix.