I tend to keep several small fleets, of usually 2-4 ships, depending on what seas I am involved in and enemy/rebel activity.
For instance, as France I tend to keep an Atlantic, North Atlantic, and Mediterranean Fleet. In this example, the Atlantic has 2 ships, the North Atlantic has 3, and the Mediterranean has 4. When the Milanese or Sicilians become actively aggressive, I tend to find a need for a couple more ships. Though I find my Atlantic fleets can back each other up adequately.
If playing the Venetians, I tend to keep several fleets.
As far as upkeep, it doesn't bother me, since that is what massive large trade incomes are designed to supplement.
Also, by using the sort of ping pong method of a couple of my fleets vs. one enemy fleet, I've managed on several occasions to intercept and destroy a massive enemy army heading straight for a lightly garrisoned city of mine.
Yargh, ye bun ch a' inlund Land lubbers.
Bookmarks