From what I've heard, people who use a joystick setup prefer mouselook off. I use a mouse setup and prefer it on. Though there are some pilots who use a mouse and like mouselook off. My advice for this, as with everything else, is play around with them both and find out what you like.
== When to use Flight-Assist and when to turn it off And When To Turn It Off ==
It is somewhat easier to land ENERGY shots with FA turned on.
It is easier to dodge and aim ROCKETS with FA turned off.