The DSG downshifts better if you put your foot in the gas pedal a bit in Manual mode. In Drive it downshifts when the rpm are low, so mine is smooth most of the times.
The way it works is it will try to go up the gears as fast as it can, so if you're not accelerating, it will pre-select the next higher gear. If you accelerate, it will think you might need to downshift to go faster, so it will have the lower gear pre-selected when you downshift making the downshift faster and smoother.