Save them (or sell them, but don't use them now). Tier 1 materia is still useful in several high-end gear, due to lower caps on certain stats (for instance, there's a few pieces of high-end gear where you can still only stick 1-3 point of craftsmanship, or 1-3 points of gathering, so using higher tier materia isn't beneficial unless the materia is significantly cheaper)
When doing overmelds on a piece of gear, the lower the tier of the materia you've been using, the greater the chance of success on your overmelds. It's not a *huge* difference, but every percentage can help...
Edited, Feb 4th 2015 5:28pm by Fynlar