You can add it to the default.properties. I've been adding manually without having a problem so far.
If you add the line:
proguard.config=proguard.cfg
As said it will only use ProGuard when exporting signed application (Android Tools => Export Signed Application)
If you start the project with the SDK before Android 2.3 the proguard.cfg file will not be created (next to default.properties as in 2.3>).
To enable automatic creation of it, just simply update to the SDK of Android 2.3 and create a new project with existing sources (which are the sources of the project you currently have).
Automagically the proguard.cfg fill will be created.
Without optimizations the compiler produces very dumb code - each command is compiled in a very straightforward manner, so that it does the intended thing.
The Debug builds have optimizations disabled by default, because without the optimizations the produced executable matches the source code in a straightforward manner.