"Store project file inside the project base directory" would be untouched (or even deprecated/removed).
How about making it a checkbox in the project creation dialog, and for "New" it would default to inside `~/projects` (which means unchecked I guess?), and for "New from folder" to inside the folder as you suggest - but with an obvious way to toggle it right there. That would also make it easier to find than a global pref for those who don't like the respective default.