As a Resource Harvester, it is best hidden somewhere it is easily defended, surrounded by other buildings. The Putty Squisher should not be too high a priority beyond level 4/5 earlier on, as Putty isn't so important at an early stage and upgrading takes a long time. If you have space, building multiple Putty Squishers would be a quicker way to produce Putty faster. Try to get all the resource buildings to a high enough level that you are able to get enough sleep without the buildings filling up and therefore losing resources.You should also use the Putty to upgrade your monsters (up to level 5) to do more damage, have more health and have greater speed. However the Goo cost for creating the monsters is higher.
Also note that level 5 Putty Squishers have extremely high health. If you don't need Putty at all, they can be used as meat shields for your other buildings, allowing your defensive towers to kill the attacking monsters.