Better to play in shorter sessions, imo. Building callouses is a process, not an event. Just like learning to play. :)

Blisters are bad in two ways I find: First, it might be too painful to play, so you are simply out of action. Second, after the blister dries and hardens it (in my experience) eventually rips the now-unattached blister part, leaving raw skin to begin callousing all over again, plus, the hard edges of the torn skin that is left catches annoyingly on the strings.

I had a friend who used to like keeping moisturizer on his finger tips to keep them softer. At that time, I was firmly opposed to the idea. I wanted cement fingertips! When I picked the guitar back up this time, I decided to try that, since cement fingertips really messes with my typing ability (I'm a programmer, so I do that quite a bit). I would swear it caused me a blister.

I stopped using it and began building 'normal' callouse and didn't have any blister problems after that. So the best thing is pure and natural as far as I am concerned. :)