I never use chips and never soak chunks.
There is almost no water penetration on chunks anyway. You only delay the inevitable, and quite possibly create the worst possible smoke in your pit.
This question is a recurring one on all the BBQ forums. A couple of years ago SoEzzy over at the Smoke Ring challenged me to do some research after I had posted that I have used fresh cut apple chunks with none of the expected "bad" smoke, in fact it was all TBS and sweet smelling.
In a nutshell what I found was that in order to change the moisture content of dry wood significantly the chunks had to be soaked for days, not hours and certainly not minutes. By significant I mean changing the moisture content from 15% to 35%+ as measured by a moisture meter.
In addition it is best to take them out of the water and let them air dry for a day, minimum, before using the chunks.
I found that soaking the wood chunks in this manner kept the smoke going about twice as long as dry wood when used on a hot grill- 450°F.
When I used them in the fire box on the CG it took a very long time to produce any smoke at all, so soaking wood is useless for low and slow IMHO. BTW I consider low and slow to be under 280°.
So, to sum up, soaking wood works if it done for a long enough time and soaked wood should be used on a hot grill only.
This test was done with red maple, other woods may yield a different result( although I doubt it).
For the record I do not soak my smoke wood, IMHO it ain't worth the trouble.
Oh and I only got thin blue smoke when using soaked wood chunks, even on the CG, so for me that old saw about it producing nasty smoke is just not true. YMMV