It's no more a good idea to mate a ram to his daughters than it is anything else in this world. You will get a much higher chance of genetic deformities and substandard stock that is weak and sickly. Can vouch for this first hand by a series of unfortunate accidents.
You can mate ewe lambs in their first year but they need to be well grown and at least 65% of their adult bodyweight. Most problems occur at lambing time as the nutritional balance for feeding a still growing ewe against a ewe feeding her lamb/lambs can be tricky to get right. If you get them in to fat you can have major lambing problems. They are also more prone to mastitis and can have a delay with their milk coming in, so they do need a little extra TLC. Most sheperds will take twins off the ewe. But, having said that, they make excellet mothers (better than a yearling any day) and from a finiancial point of view you get an extra lamb out of the ewe and she is not running empty that second year eating grass with no profit. I have only lambed like this this year, with no problems and it has not put us off.
HTH
Allison