After playing on Hard no Pair Up and other restrictions, I can say that those that say pair up has no downsides aren't completely right. It does give a good buff, but after playing extensively without it I noticed something, that I'm not sure if other people notice (it's fairly obvious). You buff one unit at the cost of not having two at the same time. I mean just think about it. Here are three different situations.
For example, you are fighting a unit that will only die with the addition of the stats from a pair up. Two units attacking it won't cut it. Pair up is really beneficial here.
But, let's say you are fighting a unit that dies from the stat additions of pair up, but also dies from two separate attacks from the same unpaired units. Now they are about equal.
But the third situation, you are fighting two units, and each unpaired unit can kill one. If you would be paired, you would only be able to kill one.
To get it straight, pair up is better defensively, while no pair up is better offensively. Of course some chapters benefit more from defensive play while others from offensive play (more defensive than offensive). No pair up is also better, when your units are fairly strong, and can do almost the same job while unpaired, in comparison to when paired.
To those that haven't tried no pair up, give it a try, it will be worth your while.