Hey folks! From the SRD:
Shadow Shift (Su): A cloaker can manipulate shadows. This ability is effective only in shadowy areas and has three possible effects.
Obscure Vision: The cloaker gains concealment (20% miss chance) for 1d4 rounds.
Dancing Images: This effect duplicates a mirror image spell (caster level 6th).
Silent Image: This effect duplicates a silent image spell (DC 15, caster level 6th). The save DC is Charisma-based.
(Emphasis mine)
Does this mean that cloakers can only ENACT the abilities while they are in areas of shadow, and they continue working normally even if light is brought to bear as long as they are 'turned on' while in shadow, OR does it mean that light dispels their use of the ability, and that only continue to function as long as they stay in shadow?
Brandon
This ability is effective only in shadowy areas
(Altered emphasis mine)
Outside shadowy areas, the ability is ineffective. Not just unable to be initiated, but ineffective. The cloaker can do what it wants, but subject it to light and it's Shadow Shift is history. The wording of the rule seems clear to me (IMHO) and backs up what I'd think logically - the shadows don't follow the cloaker into the sun. They can be manipulated, but not created.
Second option in your post, really.
Now, a cloaker that generates its own shadowy area (not just its own shadow!) is a whole different ball game!