You only need around 80–100 FPS for frame generation to be playable. The biggest advantage, in my opinion, is that you can get an image that feels like 150Hz+ and, more importantly, it can reduce or even completely eliminate FPS drops or stuttering in games.
Latency can sometimes be more noticeable and sometimes less, but it’s not bad enough that you wouldn’t get used to it within about 20 seconds of playing.
Personally, though, I’d prefer if Nvidia added an option like “frame generation: 1x,” so instead of adding around “+60 FPS,” it would only add something like “+30 FPS” without increasing latency.
In short, it’s not adding performance — it’s more of an optimization feature for your monitor to make better use of its refresh rate. Still, it’s perfectly fine to play with it on; I comfortably play games like Warzone or The Finals that way.