Originally Posted by cycledogg

It is a case of both. Before installing a new inner cable, manually stretch it, basically holding one end in each hand and giving it a stern pull a few times. Then when installing the outer housing, be sure to firmly seat the housing into the ferrule and the ferrule into the frame housing. This will help the "cable stretch". So yes, after a few miles of use, everything will settle in and a tweak will be required for a more precise shift/break. FYI: this is what in-line cable adjusters are for on the shift side. Cable does stretch. It may be steel, but under stress it will tend to loose strength and become longer.
Cheers