Your friend is right. I personally use Octane 94. The compression is too high (11:5:1) for it to run on regular gas. If it is run on regular gas (especially if taken into lift over 6000 - 8400 rpm), it can cause severe sluggishness, engine damage and detonation. Since it is a 1.8 liter engine, it gives really good gas mileage in city driving ( revs kept below 5000 rpm). As for your other question, XRS is chain driven.
Funny how people dread the "premium" octane word required for a car as if it leaves the owner in shambles and leads to bankruptcy.

Realistically, the difference between the cost of Octane 89 and 91 for a full tank of gas is less than $2.00. If I really "worried" about that $2.00 per tank, I would much rather buy one six pack of pop less per week.