When to Use Paper - Paper Prototyping: The Fast and Easy Way to Define and Refine User Interfaces - page 248

Timing and Scope
There are good times in the project cycle to use paper prototyping, and there are better times. There
are even a few bad times.
Stage of Development
In the early stages of development, before implementation begins, paper prototyping may be your only
viable option for doing usability tests. In the middle of development, you might have the option of testing
either a paper prototype or a working version of the interface. But right before a release? Yuck. In my
opinion, the most difficult time to do any kind of usability testing is in the month before launch—the
development team is focused on fixing bugs and getting the product out the door, so it's difficult to get
any bandwidth from them to observe usability tests. Even if a few tests can be squeezed in, there may
be little opportunity to fix problems before the release, which can be demoralizing. In essence, testing
done in the month before launch might really be testing done for the next version of the interface, so if
you find yourself in this situation, you might think about waiting until then. If you're still primarily
concerned about this version, make every effort to do your testing as early as possible.
Although paper prototyping may be most common during earlier stages of development, it isn't wrong to
use it in any situation in which the logistical advantages described in this chapter are sufficiently
attractive.
Scope of Planned Changes
If you're designing something brand new, paper allows you to do several iterations of a design before
you start implementation. The flexibility of paper as a design medium isn't a compelling advantage if
you're not in a position to make substantial changes—perhaps you've already committed to a particular
approach and you're just refining some of the details or maybe you've already done some usability
testing and have a good handle on the issues. But if you know the current design will present you with
some challenging problems to solve, paper will give you freedom to experiment.