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Does anyone have any experience in disconnecting the motor and keeping it centered and just using the ruders for steering? Does this make steering any easier?

Yeah, lots of folks do just that... but only when sailing. Doesn't seem to make much sense when powering, as direction of the motor is the best steering you can get at speed. Rudders should be up for any serious motoring... only put them down for close, slow maneuvering.

When I am using the autopilot to motor at under 7 knots, I disconnect the motor and lock it centered and put one rudder down. For my setup, this provides the autopilot (wheel mounted) with the best control and the least work load. I base this on watching how many times it seems to make adjustments and how well it does maintaining course. It seems like when I put both rudders down, it does ok but it oversteers a little - almost like it does not expect the boat to respond as well as it does.

For what it's worth, I also pull up the daggerboard completely when motoring with the autopilot - when I am steering manually I find it much easier to go straight with about a foot of board down, but when the autopilot tries to do it with any board down at all it just zigzags all over the place.

Yes to what kmclemore says. But I only "reconnect" when going above 6 knots or facing a tricky docking problem.
The boat steers fine with rudders only, but you do need to have some way before the boat can react.
It's somewhat strange feeling at first, but it's easy to get used to.
If you do go this route, practice steering somewhere other than around stuff to run into.
I never sail anymore with the motor connected.
The difference, to me, is many times well worth the effort to do the mod.