All the cans I've installed have the solid flange, thus had to do the cutout before I could finish fastening the drywall. I guess it's not really required that you drop the flange, but I don't see why you wouldn't want to. At the very least, I'd prefer to have metal between the heat of the bulb and the ceiling material, be it drywall or drop ceiling panels.
the question is are you suppose to? maybe that is the difference between cans for insulated and uninsulated
And the plot thickens...
I think I'd drop the sleeve down just so the client doesn't ask me why I didn't. And if I'm doing something for myself (yeah right, that'll ever happen), I'll drop it for structural integrity, in case of a hurricane or earth quake.
You mean insulated cans or cans for insulated ceilings? The later is in a metal box to keep the insulation away from it. And just post it in any ol' thread, it doesn't really matter. I think there's one about drywalling a basement that is open to off topics.