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I'd say I do both. Someone else is always driving instead of me, when we have to travel around town, so this is the time where I get a lot of stuff at pokestops and catch the odd pokemon. I also designate time to walk outside to hatch eggs and beat gyms.
Yeah I renamed an Evee to a Sparky and I got a Jolteon. People just recommend you restart the app after renaming your Evee to ensure that the name change went through the servers, due to the occasional instability of them.
Today I spent several hours walking around with a friend playing Pokemon Go! I was able to take over a gym for the first time, thanks to the assistance of some other people playing who we saw. I hatched multiple eggs thanks to all the walking we were doing. I also got to evolve 2 Evees which...
I chose Squirtle, which was also my starter pokemon in Fire Red! I managed to find a stronger one, as well as a Bulbasaur when I was walking around my neighbourhood though.