First law of optimization: don't do it. Second law: don't do it unless you actually have measured and know for a fact that you need to optimize and where.
Only if objects are really expensive to create, and if they can actually be reused (you can reset the state with only public operations to something that can be reused) it can be effective.
The two gains you mention are not really true: memory allocation in java is free (the cost was close to 10 cpu instructions, which is nothing). So reducing the creation of objects only saves you the time spent in the constructor. This can be a gain with really heavy objects that can be reused (database connections, threads) without changing: you reuse the same connection, the same thread.
GC time is not reduced. In fact it can be worse. With moving generational GCs (Java is, or was up to 1.5) the cost of a GC run is determined by the number of alive objects, not by the released memory. Alive objects will be moved to another space in memory (this is what makes memory allocation so fast: free memory is contiguous inside each GC block) a couple of times before being marked as old and moved into the older generation memory space.
Programming languages and support, as GC, were designed keeping in mind the common usage. If you steer away from the common usage in many cases you may end up with harder to read code that is less efficient.