I think I would go with the tried-and-true 55-grain. The .223 / 5.56x45 is, after all, just a .22 caliber firearm. The effectiveness of the round is derived foremost by the upsetting, or tumbling, of the bullet when it strikes and enters the target medium. Everything I have read tells me that a minimum velocity is needed for that upsetting to occur. Assuming a standard M16 barrel length, for example, the newer 62-grain bullets will reliably upset out to a shorter maximum effective range than the older 55-grain.
You're using a barrel of half the length of the M16, which will reduce the bullet's muzzle velocity and thus will reduce the distance out to which the bullet will reliably upset upon impact. Therefore, I would be very concerned about the distances within which you anticipate using this firearm for "social" purposes. How "social" do you want to be?