Personally, I like to impose my own limits, but that's because I try to go through it 'realistically'. Don't ask. But, it's not like levelling up is some sort of sin. Personally, I tend to keep relatively low level, but I also just like the idea of having to refine the more powerful magic. It makes the SeeDs seem more professional.

And, of course, if you overlevel, the boss fights /are/ easier, as they have a level cap.