Yeah I was thinking more along the lines of standard moves only since most tourneys at this point in time aren't allowing customs. But with customs I would argue that Extreme Balloons are the best overall option. Recovering low against Sheik isn't a very good idea because of BAir stage spikes, and its in that sort of position that Balloon Jump is best. So most of the time you should be avoiding coming in from below. When you're recovering horizontally is when needles and bouncing fish become an issue. But Extreme Balloons launch you a good distance upwards if both balloons get popped, meaning you aren't totally helpless. I'd actually say that with Extreme Balloons people should be aiming to only pop one balloon if they want to gimp us. Not that it makes much a difference though, since you can manually destroy the other balloon to still get the vertical jump. So basically Extreme Balloons because if...
...you happen to be recovering low, the constant threat of hitboxes makes Sheik risk getting hit and/or giving you your recovery back when trying to stage spike. In the event that only the balloons get popped, they'll still get hit (needles aren't their best option here and I think bouncing fish only gives intangibility on startup) and you'll get launched up towards the ledge. In the event that you get hit as well, you can still walltech and recover again (though I suppose you can also do that with Balloon Jump [though Balloon Jump's hitboxes aren't as versatile as Extreme Balloons'])
...you happen to be recovering high/horizontally, bouncing fish is still pretty unsafe for them due to what I think would be the impossible spacing necessary to only hit you and not the balloons. Also, I need to test this, but if the exploding hitbox from the first balloon doesn't cancel out the rest of the needles, the second balloon will get detonated as well, giving you the vertical boost. At this point you need to direct your descent carefully to avoid bouncing fish and FAir
Of course they always have the option of using Vanish to very safely pop our balloons and gimp so shrug