When the number starts to flash thats when you start BRAKING!
or when the GT3 evil light of doom wants you to anyway. I ignore it.
If I do a 5 lap race with tyre wear on laguna seca, the first time I go through the corkscrew the recommended gear will be 2nd. When my tyres are in the red, it will say 1st gear instead, so it does make a difference.