It's so crazy how far off ultrasounds can be, isn't it? And quite scary if they go off in the other direction (ie. predict 7 lbs, wind up with 5.5 lbs)!
Jenx, unless there's a sign of distress in mother or baby, it's pretty much always best to wait and let nature take its course. If you try an induction before your body and baby are ready, there is a high likelihood of a failed induction that could lead to a c-section (if they start talking induction, I strongly recommend you ask about your Bishop score (
http://en.wikipedia.org/wiki/Bishop_score) and use it to make an informed decision. Chances are, you'll go past 40 weeks as the average pregnancy does.
I know you're worried about the possibility of waiting allowing him to grow too big, but really, "too big" is quite rare. That, combined with how notoriously inaccurate ultrasounds are with estimating weight, especially in the third trimester, would set you up for a low chance of there actually being any problems. And don't forget that women birth big babies naturally all the time! And I know a big belly can be intimidating, but your fundal height is dependent on 3 main things: the baby's size, the amount of your amniotic fluid (which is directly affected by how hydrated you are!), and the baby's position. So small baby in a funky position in a well hydrated mom could mean a huge belly, while a huge baby that's way engaged in a not-so-hydrated mom would mean a smaller-looking belly.
You're right-- it's pretty much all guesswork until the baby is out. The decision is ultimately up to you, and I think it's really important to trust your intuition in pregnancy. For me, unless the non-stress tests and ultrasounds were showing that the baby was in some sort of distress, I would trust my body and tough it out until nature decided it was time. So if I were you, I would make sure you listen to your instincts, keep yourself well informed (ask lots of questions! Find out your Bishop score if they start tossing induction around as an idea, ask for statistics, etc.), and try your best to relax