Menu Position MENU --> 7 --> Auto Mode
What they Do Lets you specify whether the camera goes to "Intelligent Auto" or "Superior Auto" when the exposure mode dial is set to AUTO.
Recommended Setting I prefer Intelligent Auto, personally.
There are actually two different auto modes available to you when you move the Exposure Mode dial to "Auto": Intelligent Auto, and Superior Auto. I went into the differences in Sections 3.1.1 and 3.1.2. This feature lets you select which auto mode gets invoked.
The only time I really use Auto is when I give the camera to a stranger to take a poorly composed and shaky picture of me and my wife. For this purpose I prefer "Intelligent Auto" because there are fewer surprises for the inexperienced shooter (like multiple frames taken for every press of the shutter release button). Another use is when something happens and I need to shoot NOW and don't have time to undo all the complex settings I had done.