This topic has been brought up a lot. If the air filter is a restriction, then a K&N will give a performance boost when the airflow required by the engine exceeds the ability of the paper air filter to flow. I doubt if too many manufacturers specify an air filter that is too small for the needs of the engine. Therefore, it is highly unlikely that just changing the air filter on an otherwise stock engine will do anything for performance. If the airflow needs of the engine are increased over stock due to modifications then the stock air filter may or may not have the flow capacity to handle the increased airflow need. In that case, the K&N may allow the engine to make more power. This is because the K&N flows more per sq. in. than paper. The K&N flows about 6.03cfm while paper is a 4.95cfm. Let's just say 6 vs 5, about a 20% increase in flow.
As far as filtering, there are mixed results on the 'net, but the concensus seems to be, and I agree, that K&N filters don't filter as good as paper, especially when the K&N has just been cleaned. So, for performance engines I go with K&N and for more mundane engines I go with either paper or the Amsoil EaO. If you want your engine to last longer (theoretically at least), go with paper, if you are willing to trade-off a little filtering for more longevity go with K&N.
Either way, colder air makes more power, about 1% for every 10F reduction.