If you are truly interested in doing the combined degree, you should take the MD-PhD offer at the "lesser" institution. There is no guarantee that you will be able to enter the MD-PhD at your top choice, so you have to ask yourself if you would be satisfied with just the MD degree. Certainly you can do research as a MD student and/or have an extended reseach fellowship after residency, but IMO this is less than ideal. There are several faculty members at my institution that were denied entry to the MD-PhD and did the MD-only here. (They sometimes remind me that while they were not good enough to be MD-PhD students here, they are good enough to be on faculty. 😛 )
Every year there are applicants to our MD-PhD program who face this choice. If they are sure they want to do MD-PhD, I recommend that they take the offer from the MD-PhD and decline the MD-only offer at our institution. While the historical acceptance rate of MD students who apply to our program is 72% (versus 13% for the entire pool), there are definitely no guarantees that a reapplicant would get in. In fact, the majority of the med students who successfully applied to our MD-PhD program had not previously applied. Of course, some individuals are hard-headed and reject my advice. Two of them turned down offers from top MD-PhD programs to roll the dice on entering second-cycle here, and are doing quite nicely in our program. (Unlike the faculty we rejected, these students are too decent to point out that my advice was worthless.)