I suspect that some of the differences in opinion here are because some people are thinking of MG tracers in ground fighting, others of aircraft or anti-aircraft applications.
I no longer have the reference to the account I read, but this is how I summarised it in Flying Guns: Development of Aircraft Guns, Ammunition and Installations:
"There was a considerable debate (which continues to this day) about the desirability of tracer ammunition. It was generally felt to be useful in bomber defensive weapons as the sight of tracers curving towards them was observed to distract attacking fighter pilots. In fact, the USAAF even used a tracer round for bomber defence, the M21 “Headlight,” which was specially developed to be as visible as possible from the front for exactly this reason. On the other hand, Air Marshal Harris disapproved of RAF gunners using tracers as he felt that this encouraged them to “hose” the target instead of using their sights. In night bombing, some crews were cautious about firing as tracers merely gave away their position; so were their opponents. The Luftwaffe used Leuchtspur during the day (L’spur) but Glimmspur (dim trace) at night. Upward-firing guns in Nachtjäger (night-fighters) usually used no tracer at all, although some pilots liked to include some Glimmspur.
There was also a debate about the use of tracers in fighter aircraft. Some argued that tracers were useful in correcting their aim, or even in firing to one side of enemy aircraft to persuade them to change course (which sounds suspiciously like a theoretical concept; if enemy aircraft were in range, most fighter pilots would sensibly be shooting straight at them). The counter-argument is that the sight of tracers flashing past them gave enemy aircraft instant warning of attack and enabled them to take prompt evasive action. It has been reported that USAAF fighter units in Europe which did not use tracers scored considerably more successes, and suffered fewer losses, than those which did, which would seem to settle the argument. On the other hand, tracers could help the pilot in ground attack or in judging any sideways drift.
One general problem with tracers was the impossibility of matching the trajectory of other ammunition types, because of two conflicting factors. First, projectile weight was usually lighter than standard, and reduced as the tracer element was burnt up anyway; also the gas generated by the tracer burn reduced the pressure differential between the front and back of the projectile and therefore reduced drag. Tracers were generally specified to match the aiming point of other ammunition at some specified distance and remain within set tolerances at other distances. Another problem in explosive cannon ammunition was that the tracer used up some of the shell volume and thus reduced the space available for HE."