I have noticed that govt. types have pros and cons...

1. building the highest govt. type available when you conquer a new city
Pros:
-gives you tons of cash
-lots of mid-advanced level structures available; hence, enhanced stability and cash from better developed structures.
-if you can get a FM into the settlement, you will make even MORE cash because it will be governed AND advanced.
Cons:
-many of your settlements/provinces go without a governor; hence, you don't make as much money and have as much stability in your settlements
-serious chance you may run low on FM's to command an army should a big time war break out
-it takes anywhere from 1-6 years to stabilize a newly conquered settlement (including time to build the government and get a basic military barracks up)! THIS IS HUGE because this can cripple an invasion and/or turn your generals into "attuned governors" while they sit in a new province

2. building type IV's in every newly conqured settlement
Pros:
-every settlement is governed.
-guaranteed stability in every new settlement
-endless supply of generals
-the BEST local troops (great in Gaul!)
-attacking army doesn't get bogged down in nation-building every new settlement.
Cons:
-you are stuck with a local king/tyrant/warlord, for better or worse, for at least 40 years. That's a looong time
-you cannot build ANY advanced civic structures
-you have to pay a hefty, regular bribe to keep the alliance in tact

The biggest trade-off is advancing your society for local military capacity. Stability is going to come either way, but you honestly should not build a Type IV unless you genuinely need the local military capacity from the region. As Romans, this is most needed in the Gallic and African provinces.