More air in actually means MORE gas used because it has to maintain the A/F ratio. However, the notion that a freer flowing air filter provides more air to the engine is ONLY true at WOT.
At anything less than WOT the only difference is the amount of throttle applied. Let's say it flows 10% better - that means that 50% throttle with a K&N looks the same to the engine as 60% throttle with a paper filter.
So for normal driving all you've done is change the amount of throttle you apply - the amount of air is the same therefore the fuel is the same.