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Uruguay - take. Make someone bigger a puppet.
You can get all resources from puppet for free by trade (it not cost civ factories jsut ask what you want) but they keep their industry and build their own armies with their own manpower that you can control - whcih cna comes hanfy if you cant afford build mroe troops of your own. If you have enough manpower of you own you may want rather to take over industry and improve your capacity.
SO somehow it depend on country you play for.
Oh and small but amybe improtant point - more conutnries, more actions, more various movement and fights - more lags late game, I prefer annex most just becuase of this.
Annex: Less manpower, you get the resources directly, you get the factories.
I don't think the choices really matter if you're only playing through WW2 but if you want to play WWIII then I think puppets are generally more useful since you can trade for their resources for free and they can fully tap into the manpower of their provinces and build a useful army.
Annexing smaler Nations but Puppeting Big ones. Compared to you of course. ^^