Is there any benefit to creating colonies? From what I can see it sucks up a lot more population than it creates, am I missing something?
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You get another source of trade and taxes. Besides, as colonies usually get converted to your religion and culture a lot more quickly than conquered provinces, your manpower pool grows, enabling you to maintain a bigger army. Moreover, your investigation rate doesn't suffer as much as if expanding by means of war.
As of your objection, I don´t remember how much population you lose in the capital and the source-province to get 3 new pops en the colony. I think it's just the double (three in the province and another three in the capital), but I may be wrong). Nevertheless, as I usually colonize as soon as I can, if I have the intention to do so, the source province is not very far over the 10 pop limit, so it drops, usually, below it. That has its advantages. The pop growth rate is ten times faster (the remaining factors equal) if your population is below 10 than if its above it, so the source province recovers quickly. The capital is another matter, though. As its population is usually far above ten, it recovers a lot more slowly (ten times more, to be precise), so expanding too quickly will represent a problem for your tax and research rates.
As always, in Rome "there is not such a thing as a free lunch", and each policy has its costs and its benefits, but in the long run I think that colonization has some advantages over conquest, if you do not play a greek country, and manpower (and maybe research) is a main issue to you.