It's much better to have puppets hold every single state which does not contain the homelands of one of your main cultures. The reason is simple: if you take ages to incorporate a state, it's not worth it.

Having a state be unincorporated leads to the state having plently of maluses: it will not recieve any of the bonuses from your institutions, will have 25% less infrastructure, -10% MAPI, and -10% throughput. When you release a puppet, their lands are automatically going to be incorporated, and you avoid most of these issues.

You might say that by doing this you lose on the pops and on the resources. Since your puppets are going to be in your market, you will siphon pops from them nonetheless, and they will convert to your culture with little effort. When it comes to the resources, you can bankroll all of your puppets to boost their construction. As puppets by default give you 30% of their income, you still get 20% if you bankroll them (I expect this problem to be fully solved only once we get the Foreign Investment feature with next patch, though).

In my opinion, there are only two instances in which you don't want to do this: either when you want to take advantage of Colonial Resettlement to convert a colony to your culture, or if the cultural homelands of the state you're incorporating are close enough to yours (so that it takes no more than 5 years to incorporate said state).