I never turn my aircon off and do not have problems with smelly aircon but agree that smells are a known problem. Where it comes from is anybodies guess as conditioned air is dry, hence the puddles of water that collect under a parked car that has its aircon on.
As for mpg, don't worry about it, the effect is negligible. My mpg with the aircon all the time averages 49. However because the greatest effect would be at very wide throttle openings such as overtaking, modern cars shut the compressor down at very wide throttle openings.
Vic.