When you accept a visual approach while Ifr, you either land if cleared to land or execute the missed approach. The controller asked whether the Cirrus wanted to go missed approach, ie. stay IFR, or remain visual (cancel IFR and remain in the pattern). I don't know of any instance where you can remain IFR with the tower and fly the vfr pattern. The tower controller definitely could have used better terminology. She could have said "do you want to go missed approach or cancel IFR and remain with the tower?" She would have had to frequency change him to approach control if he went missed.