Ummm lets think about this one...... 70 bucks to replace brakes or untold amounts to fix a transmission. I'll use my breaks for what their designed for.
I am about to drop some SCIENCE on your ass. Actually, on this entire thread, because some of the stuff being said here is a bit off (and I've been away from the forums for a while and sort of want to bust out SCIENCE).
In a manual, when you step off the throttle, the vehicle stays in gear and the fuel injectors shut off. No fuel is dumped into the cylinder on the compression stroke of the motor. The vehicle will slow down via engine or compression braking. Momentum drives you forward, some limited mechanical resistance (read: friction) helps slow you down, but the biggest force drawing energy out of the system (for all intents and purposes, let's think of the system as engine, transmission and drive wheels, connected and in gear) is the compression stroke of the motor.
In neutral, you simply have mechanical friction slowing down your car. In gear, you have compression helping out. Because the engine is still being turned by the momentum of the vehicle moving forward, the intake and compression cycles are still happening, but without any combustion. Air is pulled in, compressed, blown out, rinse and repeat. On a 2.0L 4 cyl motor with a 10:1 compression ratio (for example), you're taking 0.5 liters of air and compressing it down to 1/10th the size in each cylinder every two engine rotations, and that takes energy. Quite a lot, really, because you're turning the motor thousands of times a minute (at higher RPM's engine braking happens faster because the motor turns faster and compresses air at a faster rate). Compressing air takes a lot of energy, and this is the primary source of you slowing down when in gear and off throttle.
Now, is bad for the car? No. No it's not. Why would it be? Your drivetrain is designed to accelerate (from a stop, no less) a 3,100 pound vehicle up to 60 mph in about 6 seconds, and you think it can't take a similar (but much smaller) stress slowing down from 60 to (near) 0 in probably 20 or 25? Please. If you're rev-matching your shifts properly, you are doing no more stress to the drivetrain than normal opperation of the vehicle, no more stress than lightly applying the brakes when in gear. No one gets all worked up about stepping on the brakes in 6th on the highway and staying in gear, upset about the stress they are putting on their transmission. Why would they? Plus, the new smart automatics like in the Evo and the GT-R blip throttle and downshift for you as you slow down, or even as you coast, if your speed drops enough to trigger a downshift. Hell, even new smart manuals like in the new 350Z have a feature that rev-matches your downshifts for you, whether or not you are accelerating or slowing down.
What IS bad for the car is downshifting
stupidly. Engine braking is NOT when you down shift by slowly easing out on the clutch, riding the friction point and using clutch wear to bleed momentum energy from the system and thus slow down. This wears the clutch and is dumb and bad and wrong, and anyone on here that does this should stop immediately.
If you're going to downshift, rev-match. An example: Let's say you're in 4th gear doing 60 km/h and want to go into 3rd to slow down. In 4th gear you are cruising at 2000 rpm. In 3rd at 60 km/h you know you're going to be at 3000 rpm. Clutch in. Spike the throttle until the engine is turning 3000 rpm (it doesn't take much gas, either). Clutch out. Don't even need to do it slowly, just smoothly, if you hit the rpm right. It'll just go smoothly into gear with nary a jerk or hesitation. From there, let off the gas, and let the engine brake for you.
Advantages of engine braking: you use less (read: zero) fuel when slowing down, where as when you clutch in idle throttle takes over to keep the engine turning. You are in gear and can accelerate out of a situation/react to things on the road faster, if you need to. You can better control speed in traffic situations.
I can't heel-toe this car because the gas pedal is too far back from the level of the brake pedal and my legs are too long, so when I'm slowing down (and you usually know when you're going to have to slow down far in advance) I anticipate having to slow down and downshift. I coast if I can, brake if I can't, and come of the brakes to spike the throttle to downshift before getting back on the brakes. The ride stays really smooth, no jerk going into the next gear and I'm smooth on/smooth off the brakes. I can do entire offramps without braking, I deal with rush hour highway traffic with very little use of the brakes, I downshift for going downhill to regulate speed, etc etc etc. I'm always in the right gear, and rarely actually
have to use the brakes in my car except when coming to a complete stop.