I have an Apollo Quad. It works great. Setting Cubase to 'manual' is the correct setting to give monitoring control over to Apollo. When you are recording, Apollo Console automatically brings the input fader up. When you play back, Apollo Console pulls the input fader down, allowing the recorded material to be heard from the Cubase track it was recorded to without also hearing a live mic. It is a good idea to set up the Cubase track with the same effects as you have on the input channel of the Apollo Console so when you punch in, the monitoring effects won't change. Also, be sure to turn off all plugins on your master buss while recording, as Cubase playback level and Apollo monitoring level likely will not match if they're on.
There is some kind of FW issue, but it hasn't been a major issue for me, running my system 16 hours every day. Worst case, I have to reset the Apollo by turning it off, then on. That's a rare occurrence. Thunderbolt is definitely the way to go, though, for the bandwidth and speed it provides over FW800.
The Apollo is a superb interface/plugs platform. 4 clean mic pres, lots of I/O and routing options. The UA plugins are beautiful: the new LA2A, 1176, API eqs are exceptional, as are most all of their plugs. There's no midi on it, but I use my old RME for that.
All that to say the Apollo/Cubase 7 is a great combo.