Another thing I find useful with the peasants is a bunch of town watch stacks. As soon as the new settlement is taken, I put 6-8 town watch in the settlement as garrison and disband all the peasants into the city. I get a good boost to population, a full garrison, and enough units to defend to provide a big enough delay for me to send a real army if needed. The army that just took the settlement is then free to continue taking more settlements.

Another tactic I use, which may be considered cheap, is to send out a diplomat followed by a 6-8 town watch stacks. The diplomat bribes the settlement into giving in and sometimes I get a new family member in the process. Because town watch have such low costs and upkeep they are perfect for this sort of thing. The only time I need better garrisons is for borderline areas when I am at war with the neighboring faction.