I saw it as a joke too. Jack has always wanted Gwen to keep her 'normal' life with Rhys. I don't think Rhys would be happy if she slept with both her co-workers (maybe if he got to join). Plus, Ianto smacked Owen down when he suggested the team-orgy (just when I thought the end of the world couldn't get any worse); so why would he smile (he cheats, he always cheats) if he thought Jack was serious.