There was just a huge discussion about this over at the Civic forums.
K&N filters DO allow more dirt to pass through. Not really a significant amount.
K&N filters DO flow more air than any other filter tested not very much more than foam.
The dirt results came from professionals running a coffee filter typr device behind all filters tested. The dirt passed by the K&N was just barely more than the others.
The flow tests used a pressure drop technique from each side of the filter and the pressure drop was least in the K&N. But not by a whole lot.
So, to sum it up, it appears that K&N is the best performance filter and WILL give you a performance edge over other filters, but the tradeoff is your engine will probly not last quite as long. But since we are talking about a 2 stroke atv here, a rebuild is not that hard to do, and in my opinion your motor will only live slightly longer with a foam filter. Maybe 5% IF you clean and oil it properly. And you must use an outerwears in sandy conditions unless you want a sand dune inside your engine; K&N's do not block sand near as good as dust.
I learned the hard way when I pulled the carb on my KFX 700 and found a good bit of sand in my intake manifold..