With the 3.23, you lose tow rating but gain mileage. It tows just fine as long as you don't get over about 7600 lbs of tow GVWR. Mine is rated to 9,100 lbs (it's a Z71 4x4, so some reduction overall). For what I will tow now and in the future, this is just fine. Plus I use it as a commuter so it is a compromise. If I want to tow a big trailer or a 5er, I will buy a 3500 Duramax anyway.
I think the big difference is between the 6-speed and 8-speed tranny. If my old Tahoe had the 8-speed, I would have seen better mileage overall and a better tow rating.