An advantage to documenting a boat is that there is a permanent record of who's owned it. Our boat was documented by all its previous owners so it was easy to do a "title search," so to speak, to trace its history.
Yes, but if that ownership information could be six or eight months or a year obsolete, you really can't rely on it for very much, so it doesn't do you much good other than for historical curiosity on long-past ownership.
Anyway, in answer to the question of doing both (state and fed), we did both. We transferred (exchanged) the federal documentation because (1) the previous owner documented the boat already, (2) we'll likely be taking the boat to the Canadian shore of the Great Lakes eventually (although Canada will most often accept state registrations anyway), and (3) frankly, I don't like state registration numbers cluttering the look of my hull -- although that's a silly reason I know. We also state registered it because (1) most states (although not quite all, as a previous poster said) do require state registration of documented vessels, as does our state, and (2) even it if weren't required, in this part of the country federal documentation of boats is very rare and I don't want the hassle of explaining and debating federal boat documentation to every water cop. As it is, I suspect I'm going to be fighting tickets for failure to display the state registration numbers. We also got a state title for it, which I know you're not supposed to do for documented vessels, but we simply can't wait six months to a year for a fed certificate. Around the time of the transaction itself you need a title or *something* for the bank if you have a loan on it, insurance, to pay the state sales tax (if your state assesses sales tax), to do the state registration, and to sell it to the next buyer if you don't hold the boat for very long.
And then even the delay aside, even after they finally processed our paperwork from last October, if you search our boat right now (USCG No. 116435, Xanadu), the expiration date in the database shows Dec 31, 2014, but my certificate shows March 31, 2016, and the tonnage shown is actually pounds, not tons, even though we reported it correctly and clearly on the exchange application.
I think it's already gotten to the point where federal documentation for recreational vessels -- unless you're going to leave North America entirely --is kind of a cute little relic of the original intent, a way to make your boat a little saltier or nautical, but unless and until they catch up and the information in the database is generally current and accurate, it doesn't serve much purpose -- and in fact can create a serious hassle if the liens, loans, and especially satisfactions are processed months or literally years after they took place. (processing 2013 for satisfactions currently)