I always write my notes directly in the book. I don't consider it "ruining" the book. It's my book and the notes make it more useful to me. Of course, I also write very few notes in my books, so the effectiveness of the notes aren't diluted.
I always found it kind of humorous when someone highlighted the "important" part of the text and wind up with all but 7 or 8 sentences on each page highlighted. At a certain point, highlights and notes in a book become kind of meaningless.
Having separate notes is sometimes useful if you're using just a small subset of the book's info or using info from several books and you're using the info repeatedly. I tend to lose the notes after I'm done using them, though.