Individual sites or merge

Not sure if this is the best place to ask, but I guess a lot of people here run multiple websites and can offer an opinion.

When I first started publishing in the web back in 1998, I had one website with lots of information about different topics – a diary, cars, photography, astronomy, computers and more.

About 10 years ago I split each site off on separate domains thinking that having each site separate allows better seo – content all relating to one topic.

I have since removed a few sites and now have 4 distinct content sites.

I want to have them combined again, to aid maintainability as I have less free time now. I haven’t decided how to do this, but I can see two options.

1) Merge the sites into one domain
2) Keep domains separate, use “common” template to keep style between sites. I would use a common header and navigation menu so that all content is accessible on all sites.

How bad is option 1 for seo if at all? Any other disadvantages?

How would I create a menu system containing the categories of each of the four sites? Is there a category xml or read from database tables?

Thanks for any insight anyone can offer

Tim