J.
I think a larger environment might be a good idea, but I also shudder to think of him entering junior high with no background with the other kids there. On the other hand, I left a small private school and went into a public junior high, and it wasn't horrible - high school was a big improvement though.
If they're thinking about homeschooling, I think it might be an option until high school age, for the right family in the right area. The homeschooling group around here seems amazingly organized - their kids do all kinds of great activities and classes. Homeschooling doesn't have to be isolating, but it seems like you (the parent) have to be able to make it a full-time job to do it right.
I definitely agree with the person who said he needs to find his niche. Whether that's something he loves outside of school, or a school with lots of groups to choose from. They should definitely leave the school if the school isn't willing to work on the problem. And they shouldn't blame him for it (even if the school tries to make it sound like it's his fault.)
There are social skills groups for kids - I keep hearing about them, although I haven't looked for them myself. Maybe their pediatrician, or the local public school social worker (you don't have to have a student there to call and ask) would have a recommendation for them.
I would also talk to the local school district in general. We have friends who have a son with some learning disabilities, and they left a private school last year. They were able to get an evaluation and an IEP in place before he even transferred. I know this child doesn't have a LD, but smart kids with issues can also get accommodations and help under certain circumstances.