Vassaling is almost always better. There are the occasional situation where conquering is better than vassaling, like if that's the difference in getting a Dom victory or not or he doesn't have much land left, and you aren't planning another war soon.
But those are the exception not the rule IMO. In the short term and long term your economy will be stronger, and in the short term your production will be better.
Conquering a lot of cities will greatly start to increase your maintenance and makes trade routes less efficient. Double the cities simply put doesn't double your economy. But leaver it to the AI and he'll get the imba Econ bonuses which you then capture. Vassals don't have WFYABTA limit AND you control what they research. Vassals don't just help your economy, they are your economy. With two or more vassals its possible to have a respectable economy just from manipulating your vassal tech trades.
So you get a vassal and so you're no longer losing troops, and you no longer need to power your economy my yourself -- time to go conquer yourself some more vassals
Also by suing for peace you can usually get gold/city/techs as part of the capitulation deal which you wouldn't if you just killed him.