1. GPL
2. Creative Commons Attribution Share Alike License

On freenode #cc channel bringatowel helped me solve some of my confusions about creative commons licensing. So things are quite clear in my mind now.

Creative Commons is working with IIT Bombay to create India jurisdiction-specific licenses from the generic Creative Commons licenses. Porting of the version 2.5 documents is completed.

As written on gnu.org about Creative Commons

This is a copyleft free license that is good for artistic and entertainment works, and educational works. Please don’t use it for software or documentation, since it is incompatible with the GNU GPL and with the GNU FDL.

GPL could also work well, but as the design and theme creation is more towards art I am going to consider Creative Commons Attribution-Share Alike 2.5 License. The attribution clause of creative commons looks interesting.

Also mentioned on the same page

Creative Commons publishes many licenses which are very different. Therefore, to say that a work “uses a Creative Commons license” is to leave the principal questions about the work’s licensing unanswered. When you see such a statement in a work, please ask the author to highlight the substance of the license choices. And if someone proposes to “use a Creative Commons license” for a certain work, it is vital to ask immediately, “Which one?”

So I am being specific over here. We have an answer to “which one?”

UPDATE :

After the introduction of new wordpress theme directory, i am thinking about changing the license to GPL. Now that looks sensible!