PROS:
1. Indicators allow getting a longer drift at greater distances and enable you to keep the fly at a given depth during that drift. An example of this would be fishing on the lower Sacramento where you may have 60-80 feet drifts. This is imossible to do high sticking, which is best for short line, close in fishing.
2. Indicators allow you to suspend a midge pattern in a lake at a given depth where the fish are holding and to consistantly put the fly back at that depth after each fish or cast.
3. Indicators make it easy to detect hits for newer flyfishers who might have a tough time keeping a tight line to their flies during a drift.
CONS:
1. Indicators can be hard to cast and you have to adjust your casting stroke accordingly.
2. Indicators are more prone to inducing drag unless you mend, mend, mend.
3. Indicators aren't as effective when high stick, short lining as a fish can take and spit out the fly more quickly than most can react, and oftentimes the hit won't even move the indicator when you are fishing turbulent water or when you don't have the indicator set at the proper depth for the run you are fishing.
Indicators require a lot of moving up and down the line whereas with high sticking, you can control the depth by how much line you have on the water.
BOTTOMLINE: Using one or not depends on where you are fishing and what types of drifts you want to achieve. I haven't really found that indicators spook fish all that much, as a matter of fact, oftentimes the fish will hit your indicator, hence the need to fish a Hopper/dropper combo--nothing more than an indicator with a hook and a nymph.
We all need to get to where we can fish many different ways if we always want to increase our success odds. There is no "correct" way, just some that are more successful on any given day.
"Should you cast your fly into a branch overhead or into a bush behind you, or miss a fish striking, or lose him,or slip into a hole up to your armpits-keep your temper; above all things don't swear, for he that swears will catch no fish."