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In a recent game I've taken over the whole province vassals and getting nearly 4k men as opposed to only a few. I'd rather take the money hit than lose all those men that I need for my upcoming war. When you think about it, the hit to economy doesn't hurt as much as buying and the upkeep on mercenaries. Comes out about the same depending on the length of the war. Plus, I have no vassals to revolt against me or try to assassinate me. :)
* Capital with two cities for universities, rest castles (castles held by me for capital county levy bonus).
* Others as many cities as I can get for gold and technology spread
* If playing very small realm long into game then I prefer capital with 5 castles.
* If I play very large realm then I prefer cities also in capital for gold (retinues are better than levies) and study technology mission.
* If Merchant republic then as many cities as possible and fights wars with mercenaries and retinues. (trade post provide a lot retinues so no need for castles)
Cities give money, money can upgrade buildings and buy retinues.
I build and keep castles in my capital because I get +50% levy sizes bonus for the capital province. There is also +25% bonus for any castle in capital duchy. But you have to personally own baron castles in the capital for the bonus.
If realm is larger then I prefer demesne provinces to spread technology for my vassals instead of maximising demesne troops from capital area. Specially I like to own a province next to any merchant republic that I create. MR benefits a lot from increased trade technology.
Coastal cities are specially good for income because they get two buildings that increase base income. Also coastal provinces should have trade post giving a nice bonus to income. (If no MR is close enough you should setup one asap)
Personally I don't see any practical reason for temples because either I want maximum feudal levies or gold and techonology. Temple is horrible compromise. Only advantage from temples is piety generation but piety isn't worth generating (except in some special situation).
Mixed answer is because the optimal holding setup depends on realm size you have, size of your close enemies and your short and long term game plan. But basic idea is to use capital for feudal levies if you need them. If you can wait a bit for science and bigger realm to give you descent number of retinues then cities are the best choice even in capital. But I suspect most common start situation includes fairly small realm making demesne levies vital source of military power.
But outside capital it is very unlikely that building more castle holdings is the best because you are anyway better of giving them to a new vassal baron. The new vassal baron doesn't provide enough troops to be better than science and gold advantage city provides.