I have it on, but for texting I have a 3 second delay on sending the text to give me the opportunity to review the text (my thumb has a tendency to immediately hit send when I think I'm finished.
I had that issue the other day trying to translate something. Eventually it stopped trying to correct, and even removed the red line under the words. I guess either it stopped trying, or figured out I was trying to type spanish.
As for Auto-Correct itself, I leave it on. I tried it with it off and thats when I realized how crappy I type. Auto-Correct saves me more time than not. Plus I try to focus on what I'm typing, so I usually catch it when Auto-Correct screws up.