I don't think anyone can make a wrong choice when choosing between paying down debt or saving/investing. Personally I agree with Bob that paying down debt is a better choice over investing the money for the simple reason of cash flow (as Bob states). I also don't think that the return over the debt payments is enough to compensate for the risk that one must take on to get that return.
Even if you think that you can earn a return of 3% over your mortgage (after accounting for all the tax implications with regards to both the taxes on the investment and the mortgage interest) would that really be enough to justify the risk that is associated with the stock market? Would you invest in the stock market knowing that on average you would only get a 3% return (on average)?
I understand about leverage and the velocity of money and fully admit that the person who invest over paying off his mortgage will come out ahead of me provided that nothing goes two wrong, I've seen enough to recognize that expecting nothing to ever go wrong isn't a realistic way to view the world.
While I don't agree with everything that Dave Ramsey says, I do think that he has the order of steps (even if the specific details may not fit your specific situation) that most people should follow down:
1.) Save a small emergency fund
2.) Pay off all non-mortgage debt
3.) Save a large catastrophe fund (2 months of expenses, plus 2 month for every person in the household)
4.) Put 15% of income in tax advantage retirement funds
5.) Save ~10% for children's education and other intermediate goals
6.) Pay off any mortgage debt remaining.
7.) Save, invest, and build wealth.
