When writing TeX and using a version control system, should you limit
your lines to 72 (or 80) characters? If you do, then your document looks
more pleasant in Vim. Your diffs become ugly.

Well, your diffs remain ugly. Conventional line diffs don't handle prose
at all. You want word-diff. GNU wdiff or the one in git.

But that only works on changes in a single line. So the tradeoff becomes
one between nice short lines, or nice word-diffs. A diff-driver in git
can handle both.