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Colonising can provide you with a steady income of resources and troops but can have its disadvantages.

When you colonise someone you gain 10% of the production of all their resources, this is automatically added on to the production of the city which seized the colony. The problem can be though that your storage capacity doesn't increase and when you have a mayor with high politics and lots of colonies you will find yourself reaching your storage limit very quickly. Unless you keep selling the extra resources a lot can go to waste.

Colony Settings

The bad thing about taking colonising someone's city is the tech level. If you keep all your suppression setting at 100 and an enemy attacks your colony, all the troops in your suzerain city will fight in the colony. This might seem like a good way to protect it but if the colony has very low tech levels then your troops will only fight at the colony tech level, meaning if the person has very high tech's and your colony has very low, your troops will be slaughtered. Its good practice to always keep all setting at 0.

Finishing the colony quest (getting 400 colonies) greatly increases your treasure drop which helps when farming gems.