I would soak the driftwood until it does not stain the water, and until it sinks, which depending upon what type of wood you get could take quite a while. I just pour boiling water over my driftwood because the pieces are too large to boil and I think boiling breaks down the wood fibers and shortens its tank life.
It will probably take a while for the pleco to reach its full size, but after it gets about 4-5" or so (sometimes less) it will stop eating algae and start eating regular fish food, and ultimately they do require a larger tank. The wood definitely is necessary, as the lignin in the wood aids in their digestion, and once you have it in there you will see the pleco spend a lot of time on the wood.