I respectfully disagree with the assertion that Germany cannot afford to spend IPCs in the Mediterranean, and for this reason I heavily favour Germany taking Southern France. 2 to 3 subs will not break the bank and it goes a very long way to assisting the Italians in their primary theater. Yes, there is no air base to provide cover, but you are, at most, only losing subs. Additionally, leaving a sub in SZ 92 will at least require a 1-2 from the Western Allies to get to SZ 93, and that alone can be enough to dissuade them depending on the board situation.
There are a few other reasons I like taking Southern France as the Germans. If you take it on G1, you can start producing units as early as G2 - this is not possible with a minor complex in Yugoslavia. Secondly, the naval base in that territory gives you a very impressive range of movement. You can make it all the way to 98 in the Eastern Mediterranean, and on the Western end you can sneak through into 91 with your subs even if Gibraltar is under Allied control. With a few aircraft stationed in Southern Italy, you should have at least one good opportunity throughout the course of the game to create serious havoc for the Allies.