Definately OFF. After playing for years you just KNOW what the proper lead for deflection is, keeping tracers on is pointless. I've found that having them on makes you lazy with regard to your shots. You tend to start shooting when you are 'close' to the proper lead, then drag your sparkly glitter hose around until you hit. With tracers off, as Levi said, you tend to get in closer, you tend to concentrate on proper lead more, and you tend to fire shorter and more lethal bursts, all good things for gunnery. With tracers on it is often hard to discern subtle enemy plane manuevers, hit sparks and control surfaces flying off, the tracers tend to overwhelm your forward field of vision. I've flown both ways for extended periods, and OFF is a definate advantage over ON.
The only exception I can think of would be switching between planes with nose or cowl mounted guns to wing mounted guns and vice versa, this wreaks havoc with your gunnery, and may require the use of tracers for an adjustment period. I tend to just fly planes with wing mounted guns for this reason.
Zazen