We have an ASP.Net MVC3 application that is running on Azure, connecting to a Sql Azure Database via Entity Framework.
The Developer that produced this has Pooling=F
Yes, it is bad idea to have pooling=False. I don't use this option even for development. You should always use the SQL Server Connection Pooling.
What you have to be aware of, however is the Transient Errors in SQL Azure. There are a couple of good reading that can be found on the Internet on how to handle Transient Errors in SQL using Entity Framework. Here is a (non-complete) list of some:
Always use connection pooling, but be aware of the Transient conditions in SQL Azure.