As far as equity goes, it depends on whether you think it will ever be worth anything and if you are willing to roll that dice. I've been a paper millionaire twice at startups; neither paid off. Obviously the potential upside is high, so may be worth taking the chance.

EDIT: you say equity only pays off if they sell the company. What is the exit strategy for this company? Are they looking to be bought, and are there any obvious buyers? Is this more a lifestyle business for the founders?

If they don't have an exit strategy, then I'd say don't go for equity until that situation is clearer.