As long as I can get away without the thread fraying -- so usually 12" to 18" for cotton floss -- unless if I'm working on aida or I'm not using a smooth-eye needle, both of which can really fray the thread quickly. In that case I use shorter lengths.
I park. If the needle is unthreaded, that can be up to 15" or 16" hanging down if I start a new symbol and just stitch a couple of stitches before the strand is parked. I leave the needles threaded while I'm working so there isn't anything hanging down, but when I finish that stitching session, I unthread the needles.