I have several types of sphag, but I do notice no matter which type it is the places that get less light the sphag is less dense and bushy and grows more open and stringy, almost like its etiolated. If I try and move it from low light to higher light directly, it just bleaches and dies. I have to slowly acclimate it to the brighter light to get it to grow dense and bushy.
When I do cutting I too prefer the live sphag method as its essentially maintenance free. I just stick the cutting in there are wait for it to grow. If I have enough live sphag on hand I'll just pot it up in whatever pot I plan to have the plant in long term and set it aside and let it do its thing. The problem I've had with the cup of water method is remembering to change the water. Even when keeping the water fresh I've still lost some cuttings to rot however.