Found this post and it helped me with my question on puffy nips. I believe I was retaining much water last night and that why I woke up with sticking out puffy nipples. No one answered my post so I got the clue that I should just research on my own.

During a cycle, people sometimes observe puffy nipples. It is exactly what it sounds like: puffy, soft inflamation around the nipple and surrounding tissue. It is not gyno. It is not hard, it is not painful. It is likely related to water retention and fat deposition. Take some anti-estrogen drugs, and lower your body fat as well.