A K&N air filter allows for less restrictive flow of air into the engine. That allows the engine to run more efficiently and make better power. Since the engine is making better power, you don't need to get on it as much. Less rpms = better fuel economy, to a certain point. It's not like you're going to see 5mpg with a new K&N, but you could possibly see 1.
I got 19/21cty 27-29hwy with my 87GT hatch, and right now, I'm getting about 19cty with my 02 GT Coupe. Both were 5spds.
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