What are the pro's and cons of cranking up the color gain on the XL1s. And what would be and appropriate amount.

Color gains controls the saturation of colors. If you turn it all the
way down you will get B&W (no saturation). If you turn it all the
way up the colors will bleed of the screen, that bright.

Just try it out and see for yourself what happens. Personally I
liked to do things in post myself. So I leave most custom preset
settings in their default position (except setup level).

The reason i ask is i have used it about 3 notches from the custom setting and wonderd if i might be doing something that i won't notice until post.

I have been using this camera in manual mode for some time now and the difference between an auto mode and manual is extreem.

Well it's always better to test something before an important
shoot. Not during. Shoot some test footage and change the
setting and see what happens in the viewfinder and when you
later watch it back. Color gain should be quite good to see,
especially if you go extreme. One notch might not be too visible
in the viewfinder though.

And in case your wondering, Color Phase pulls all the colors
towards either green or red (if I remember correctly).

I've found that when outdoors, adding two notches makes everything pop a little more. . .brings out the blue in the sky, and the green in the grass. This is for sunny happy days. . .for a cloudy day, it helps take a little of the grey out of everything.

If you're gonna try indoors, make sure you white balance manually (which in my experience makes the overall color tone very cool--cool colorwise, not as in "awesome"); the XL1s likes to shoot red, that is, add red to the picture, if you simply use the 3200K preset, and when adding color gain to that, it'll just be too reddish. If you WB manually, adding color gain to the cooler toned image might look okay.