It's your choice.  Both are acceptable methods.  I suggest you experiment with each then choose what works best for you.

If you choose to put your text in model space then I would suggest using Annotative Scaling.  This applies to dimensions, blocks, leaders and hatching as well.

If you choose to put your text in your paper space layout then you do so at the exact height you want it to print at.  The same goes for your dimensions.  In regards to dimensions however you must make them "associative" which is not the same as annotative.