I got to experience this first hand when I lived in Heber, UT. We lived in a rural area outside Heber. The area was called Daniel (or Daniels).
Daniel owned a spring, which provided all the culinary water to the people in Daniel. The spring was felt to be maxed out, so no new households were allowed to hook up to this culinary water; they had to drill wells. Heber, meanwhile, was rapidly running out of culinary water due to tremendous growth. They decided to annex Daniel because they really wanted that water and felt they could exploit to a greater extent than had been done, but since they knew it would not be a popular move, they sought to do the annexation in secret meetings. (And yes, that is illegal, but it was happening anyway.) Residents of Daniel found out, went door to door through the whole neighborhood, and we all sought alternatives.
One that was legal at that time was to become a "township" which was not a full town. In order to become a township, we had to have a ballot vote, and it had to pass by a "super majority" which means that over 50% of ALL REGISTERED VOTERS had to choose the township alternative. This was hard, as the voting registers actually had dead people, people who had moved etc. on the rolls. Nevertheless, the township passed. (And after Daniel became a township, townships were disallowed by the politicians in Utah.)
Now, why would the area not want to be annexed? Well, everyone in this rural area was either on the Daniel spring, or had their own well. Everyone had a septic tank. If the annexation had gone through, residents would have been forced to hook up to the Heber city sewer and water, at OUR expense. Our taxes would have gone up significantly. A lot of our choices would have been taken away from us. On the one hand, yes, we would have had such public services as garbage pick-up, street cleaning, paving of dirt roads, and sewer and water; but you see, the reason we all moved there was because we wanted to raise sheep or cows. We LIKED the dirt roads. If we had wanted to live in a city, we would have moved to one. Once the annexation took place, we would have all had to get rid of our livestock. The area would have changed completely, and for the worse, in my estimation.
Since my time, the area of Daniel has now incorporated into their own city. Again, this was to give the residents control over how their area was developed and what sort of community it became. As far as I know, the rural atmosphere has been preserved so far. The taxes went up slightly, but not much. The main reason the residents decided to incorporate was because once again, Heber was making annexation moves. The incorporation very effectively blocked Heber's efforts and has given the residents more say in their own future.
So it can depend on the situation but incorporation can be a very effective tool for residents of a particular area to frame what sort of community they would like to have.
