My general advice to clients is IO while they build a portfolio, then once they are comfortable with the asset level that will generate their retirement income, then start paying down debt. Wealth, after all, is assets less liabilities and while a 100% offset can and does work, at a point in time paying down principal should be done.
The offset should be set against the PPOR first and once that matches the PPOR loan, then an offset against an IP but I would not routinely set offsets against IP's as it limits the number of lenders and often is at a higher cost in terms of fees.
I generally use 5 years IO as the initial term, otherwise servicing calculators can become an issue and as Rolf said, a number of lenders are happy to roll over with a minimum of effort, others require more which then makes it a good time to review the loan/lender anyway.
That said, some clients want to pay P&I and others need to because of poor spending habits.