There shouldn't be anything wrong with informal language, as long as you speak with people you know, friends, young people, your family etc. Especially I don't think it's a problem in English. In Russian or German it might be worth considering.
As for "don't", it's correct that it's "extracted" to "do not", but when it's in a sentence like "Don't you mean John?", I think it's "extracted" into the right positions (and not neccesarily only as words standing next to each other).
I think correct grammar is good, but I don't see any point of taking it into the subjective area where it's up to the people who speak themselves whether they want to use formal or informal language. Informal language isn't incorrect, it's just informal.