Unless you do so on a regular basis, I would not recommend starting to do calculations in your head as part of your GMAT studies. Anything greater than a single number (such as 9 * 7 or 8 - 3) should be done on paper until you feel like you are just too good at this to keep doing calculations on paper.
Those who do math all the time and have done so for a really long time - the math specialists - enjoy doing the math in their heads. It is part of who they are. For them simple calculations are not very entertaining and so doing the calculations in their head makes it more interesting. And it can certainly be faster to calculate in your head, provided you are 100% on this with no mistakes.
The interesting thing is that I have taught many students who were much better at pure math than I am. They perform large calculations in their heads, something that I could probably do, but I do not risk it since I may make a small mistake. Yet, on the GMAT these people often score below the 75th percentile. That is because the section is "Quantitative Reasoning" not "Math." I would say that of the 37 problems on the Quantitative Reasoning side only 20 require actual calculations with numbers larger than 10 (many D.S. questions can be tested with small numbers less than 10).
So, for the average GMAT student - especially one who is seeking help in Quant - I would say that calculations greater than single digits should be done on paper. The GMAT puts a premium on tricking you, what you need to be looking out for is the "misdirection" where the GMAT funnels you into answering the wrong question or making an assumption. You need to be focused on these things and your math must be reliable.
Bottom line - if you normally do calculations in your head then by all means keep doing them there. But just for me I would say that if you are not already doing this on a daily basis it is better to be sure on test day and that means using the note paper. Remember, you can earn a 49 or even a 50 on Quant with only 25 correct answers out of 37. The premium needs to be on getting answers right, if that means a few more seconds in the calculations then that is what it means.
