Studies show that puppies who use pee pads/newspaper etc have more accidents in the house. I wonder if it isn't because often those are used by people who don't train appropriately. I wouldn't trust mine with pee pads.. ingesting those can be deadly. If you really want to let the puppy have an indoor potty area, that is your business. There have sure been times I wish mine were litter trained! There are great litter boxes that you can put the fake grass on that is easily cleaned, urine soaks down. I know a lot of people with tiny dogs who use those and never have issues.
I seriously have always just preferred to take them outside. They learn in the house is off limits and it is less confusing. Some people in apartments, or extremely cold climates, find doing both is incredibly helpful. So truly it depends on what you need and how well you can work with the pup so you don't create confusion about where is okay to go.