I use the highest that doesnt visualy lower my mana pool by more than a milimeter. I got grade 1 for first 3, then grade 6 then 9 and then by wave 30 using 13s, usually cap at lvl 20-25 at 100-160 wave. Didnt get past that point that I would need it yet,
Yeah I start small and cheap and move up as soon as possible. If your only dropping 4 its doesn't seem to matter much but when you can handle the beacons or have the map covered with towers/amps then the higher lvl gems help to make the armor and hp manageable at 999 monsters. At this point just use as high as you can while only denting your mana slightly. I stick a proxy gem in an unused amp and upgrade it and duplicate as needed.