No you are not. I quit using the dining plan entirely after the changes made in 2008. Besides, I have AP and DVC, neither of which is really workable with the free dining offer which requires you to buy 2 day park tickets and a rack rate resort package.
It does not create extra crowds in the parks. No more than any other resort discount would (and free dining is a resort discount - not a restaurant discount). It does create extra crowds in the restaurants.