You do need the ballast if using points.

For far, far more than you wanted to know about
coils and hi-energy ignition, read thru this tome:
http://www.shoptalkforums.com/viewtopic.php?p=910585#910585
(though it may not directly address your question)

Jim

The stock Bosch coils for old air-cooled VW’s has a built in ballast
resistor.
Are you saying that you have an aftermarket coil that uses a separate
ballast resistor?

If so then, yes use it.
Sorry, didn’t mean to advertise.

I have a 1973 VW Beetle with:
Tiger CDI
and

Jacob’s Plug wires
http://www.aircooled.net/new-bin/viewproductdetail.php?keyword2=IGW0005

NGK B5HS or Bosch W8AC plugs gapped to .038 IN. The instructions say .
041 IN but I allow a margin for error.
http://www.aircooled.net/new-bin/viewproductdetail.php?keyword2=IGS0001&cartid=0
327200923291921
For stock and MILD high performance engines. We have found NGK is
better than Bosch, and are equipped on the NEW VW engines in Mexico!
Price is for a set of 4 plugs.

SVDA distributor
http://www.aircooled.net/new-bin/catsearch.php?categoryid=IGD&cmd=list&parent2=I
G&perpage=
or
http://www2.cip1.com/ProductDetails.asp?ProductCode=VWC-043-905-205

High Energy Distributor Magnition cap from CB Performance
http://www.cbperformance.com/catalog.asp?ProductID=340

Modified rotor from aircooled.net
http://www.aircooled.net/new-bin/viewproductdetail.php?keyword2=IGR0002&cartid

I like these add-ons.  It works for me!

        ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Here are some good links that include install instructions and a
paragraph from Bob Hoover from one of these links:

http://www.vw-resource.com/cdi.html#procedure

Engine Compartment Wiring, Stock  (Without CDI or CompuFire)
http://www.vw-resource.com/alternator_wiring.html#rewire

A Bob Hoover Sermonette on CDI Systems
(Used with permission.)
Two types of CDI units are offered -- a points-triggered CDI module
and an optically-triggered CDI module.

The stock points work okay for triggering the unit... sorta :-) The
points never wear out since the triggering signal is only about two
hundred and fifty milliamps (a quarter of an amp) as compared to 10 or
11 amps in the stock system. But the rubbing block wears down and you
have to regap the points every 25000 miles or so. And as the miles
build up the spring on the points weakens and you start to see points
bounce, even at fairly low speeds. But points are inexpensive, robust
and universally available making their use practical. I started using
CDI modules in the 1960's and used the stock points for triggering
until something better came along.

As a final note, a lotta guys go to a CDI module because they are
having ignition problems and sure enough, the problem goes away once
the unit is installed. You'll hear this same story from guys who
merely replace their points with a Pertronix or other brand of
electronic switch. But the odds are, the problem would have gone away
with a good tune-up or rebuilding the distributor, which needs its
seals replaced about every 50000 to 70000 miles. If your distributor
needs an overhaul, the mainshaft will be loose and that looseness will
cause excessive 'hunting' -- the spark won't always occur at the
proper time.
A CDI module will trigger reliably with a point gap that's too small
to measure (!), meaning it will even trigger reliably (although not
accurately) with a distributor that is virtually worn out. By the same
token, replacing the points with some form of magnetic triggering
often masks that wear. Your distributor is still worn out and should
be overhauled or replaced but the 'hunting' will have vanished --
right up until the mainshaft binds or the dog gear breaks off or some
other catastropic failure occurs.
There's no such thing as a free lunch J :)
~~~

Install a rotor that has been modified for high-output ignition
systems (see following note).
Note: John Connolly (Aircooled.Net) says "If you have a high-output
ignition (e.g., CDI), here's a tip. Bosch rotors have a resistor
between the middle and end, under the epoxy. High output ignitions
WILL burn this out, resulting in you tearing your hair out trying to
find the cause of the misfire. Dig it out, and then braze a piece of
brass in place of the resistor. Fresh epoxy will finish the job
nicely. NO MORE MISS." Modified rotors for high-energy systems are
available from Aircooled.Net.
~~~

http://www.aircooled.net/new-bin/viewproductdetail.php?keyword2=IGR0002&cartid
This is from the link above:

Ignition Rotor
Price: $ Varies according to options
Part #: IGR0002 Genuine Bosch or OEM Rotors. NEVER use aftermarket for
ignition parts! Rev control rotors CAN USE the late beetle rotor if
you don't mind losing the RPM limiter. Also, if you have a high output
ignition, here's a tip. Bosch rotors have a resistor between the
middle and end, under the Epoxy. High output igntions WILL burn this
out, resulting in you tearing your hair out trying to find the cause
of the misfire. Dig it out, and then braze a piece of brass in place
of the resistor. Fresh Epoxy will finish the job nicely. NO MORE MISS.

Modified Rotor, SVDA, 009, and 69+ Stock Distributors
$18.00
This modified rotor is used on high energy ignition systems. Fits 69'
and newer stock distributors, our SVDA, and 009s. The stock rotor has
a resistor in it which will BURN UP if used with our CDI, MSD, or
Jacob's ignitions. You can do it yourself, but we have these already
modified for your convenience. The epoxy is ground out, and the
resistor is replaced with solid wire to handle the extra ignition
power (the resistor will eventually burn out). The wire is re-covered
with epoxy again, and ready to go.

http://www.aircooled.net/gnrlsite/resource/articles/mods.htm

Add a CDI to your Ignition System: under an hour. The Capacitive
Discharge Ignition provides a major ignition upgrade, and can be
installed in under an hour. Spark plugs last 4X longer and plug gap
can be opened up to .040". In return for the investment in a CDI, you
get 3-4 mpg better mileage and your starts with a quick turn of the
key even on cold mornings (instead of 2-3 seconds of cranking before
it fires up). SMOOTH running, even before it's warmed up! Must be used
with a set of Super-Mag Plug Wires (the higher energy produced by the
CDI will overwhelm stock or used wires), and complete the ensemble
with a new set of NGK plugs (better than Bosch).
Replace the Ignition Cap & Rotor: 3 minutes (give or take). Bosch is
the ONLY brand of these parts that I recommend you install. Leave the
clear distributor caps for the show cars (they run like crap). Make
sure you switch wires one at a time!
     ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The instructions for my CDI said:

* to use a stock coil with a ballast resistor.
* not to use a high output coil.
* to use stock spark plugs. Do not use the fancy triple electrode or
Platinum plugs.
* to gap the plugs to .040 -- .041 inch gap.
* to use special 8.5mm HEI spark plug and coil wires.

I think I will remove my CDI.
I got over 7 years of use with it.
I think it will run just as well with the stock distributor, Pertronix
drop in ignition, and stock coil.
If I drove quite a bit on he highway, I might keep the CDI.
That's where you get the extra mpg from the CDI, not while driving
around town.
 It just seems like one more thing to go wrong.
Have a good one!