I do a mix of both. I plan my world, my sims, their homes. Sometimes I plan them all, sometimes a few or even just one and let the game fill up the rest or just use the pre-mades. Even with the pre-mades or random townies in mind, I do have an idea of what I want to see happen or what I'm trying to achieve. I play and let the sims and the game decide some things. Sometimes the story gets totally derailed and goes way off the track. Sometimes bits work out the way I've planned. I prefer to have a bit of surprises and challenges thrown my way and use them to interpret or enhance the story I've already got in my head.
When everything works out all tickety boo the way I'd planned, I get bored... fast.