I know Cobain never did, and I've noticed many others dont. From what I gather most have it on setting 1 (Cobain used that setting on everything but possibly the unplugged solo of "man who saved the world"), personally I prefer setting 2, because 1 is a little too muddy at times.
When my DS-2 comes out to play in my basement I connect a footswitch. But I haven't played in a band since I started collecting pedals so I've never had a chance to see if I would use it live.
I know with the OD-2 that both setting are quite different and the R version has a footswitch jack..i had the DS-2 and i remember messing around with the footswitch but it was many moons ago so i can't remember the sound difference.. i assumed that mode 1 was a regular DS-1 sound and mode 2 was more fatter,full on sort of thing like the OD-2...