I tend to prefer the blurred backgrounds as a matter of style, so I let the lenses run just slightly below their sharpest. They're usually adequate a stop below and still pretty damn good, but I have a D700 which has pretty large pixels anyway so it may not be as apparent as on a D7000. Regardless, for me, style and flexibility outweigh absolute sharpness any day.
If I was shooting with a 35mm f/1.8 I would be using it at f/2.0 a lot for isolating subjects and getting cool blur.
I would switch to maybe f/4-5.6 for everyday flexible stuff (prevents you from blowing the focus too often as well) and switch to f/11 or even f/16 if I'm doing architecture or want most everything in focus.
An yes, aperture priority is the best option for everyday shooting unless you want a specific shutter speed for something (like motion blur, or fast action)... and even then, aperture priority works if you watch the metering carefully.
At night, i often shoot in full manual because longer exposures (more than 1") start to mess up the metering. Of course, then you're using a tripod and shooting static shots anyway, so it's not as big an issue to try again if you miss the exposure.
Also, when you really need the light, don't be afraid to go to f/1.8. It's better than bumping the ISO up, or risking motion blur if you're getting under 1/60. Just do it. Those lenses are still damn good wide open.
Good luck!