If you have a backyard in a house, then I would totally say outside!
I don't like pee/poop in the house, PERIOD, lol.
I had never heard of a dog (besides a puppy) using the pee pads until this website. lol. That's no offense to people who use them, I understand they can be really convenient especially for apartment living, etc... but I don't want my dog to think peeing/pooping in the house is acceptable at all, even on a pad.