ive been with the same window company for the last 17 years. we've always used the 1/4 inch difference method. frame measures 1/4 inch less than the rough opening, on all sides. in my opinion, 1/8 inch doesnt allow for much manuvering or very tight applications.
Depends how racked the opening is, however, we deduct one 1/4" from the width and the height of the RO. That is where I get the 1/8 on all 4 sides.