The general thought is Round 1 for the tougher schools since the app volume is lower (though that is changing) and Rd 2 for backup and schools around your range. This year the Round 2's saw HUGE numbers (1400 for UCLA's Round 2, out of 3000 apps usually!) and most schools got some crazy numbers in Rd2. Round 1 saw the most increase, but that's because Round 1 is traditionally a smaller round, so most of the increase came from people who prepared early (like us here at GMATClub).
Again, if you can get it done by Round 1, DO IT. But if you have to rush and turn in something sub-optimal, DO NOT DO IT. It's better to turn in an awesome application later (in Round 2 for 3 round schools and Round 3 for 4 round schools) than a not-so-good one earlier. I turned in my Kellogg app in Round 2, but I think it was my most polished app, and even with the increase in applicants and 2 other people with very similar profiles already in during R1, I still got in.
I strongly recommend you get all the schools you really want to get into done in ROUND 1. Why? You really don't want to wait for results in March instead of January, when everyone on BW and here start posting their admit results. I'm VERY glad I got most of them out of the way and found out my top choice in January. And even then, waiting for Kellogg by end of March was still tough. i can't imagine if all my eggs were in the Round 2 basket. I would be a nervous wreck!
So apply to 2-3 reach schools, add 1 competitive school and 1 safety in round 1 (at most 4... any more than that you'll get burned out)
For round 2, maybe apply to 1-2 competitive and 1-2 safeties. For a max of 4 (2-3 is ideal).
Why safety in Round 1? Because it'll save you a LOT of grief knowing you got into a b-school in January (see my point above), even if it's not your top choice.
Speaking of which, make sure you will GO TO the safety school. Otherwise there's no point in applying to a school you won't go to.
Alright, my time is limited here in Taiwan's internet cafe, so I'll stop here.