I want to make a cinnamon Italian buttercream to ice cupcakes. What tastes better; using a cinnamon extract in combination with or instead of vanilla extract, or, using vanilla extract and adding real cinnamon? How much cinnamon should I add?

I vote vanilla extract + ground cinnamon

How much cinnamon do you think I should add? 1 tsp? 1 tblsp? I don't want it to be too spicy.

it really depends on what your batch size is. this is the recipe I use (Warren Brown's, from Cake Love):

http://www.cookstr.com/recipes/italian-meringue-buttercream

it's easy to go over-board with cinnamon. for my batches, I'd start off with a pinch and work my way up to 1/2 tsp, tasting each pass for what I like.