I second Suzanne in the fact that there is no reason to drop below 1200 if you can lose weight on that level at a reasonable rate of 1/2-2 pounds per week. This means WITH exercise though...if you are on 1200 and not losing weight, but you are pretty sedentary-then the reason you aren't losing isn't because of your diet, but because you need to exercise.
Causing a calorie deficit-making you lose weight-is a whole of two parts. You cause the deficit by exercising to burn calories, and also from consuming less. It doesn't do you any good to consume less, less, less-but then be doing so because you are not exercising-or not exercising ENOUGH.
I agree that starvation mode isn't the real main reason that I recommend not going below 1200 on a regular basis-it is nutritional needs of the body, which are hard to complete below that level.
Another option for you rather than going below 1200 all of the time (if you find that you end up needing to) is to cycle your calories. This basically means that you might eat 1200 calories a day for a week or two, and then cycle down to 1000 or 1100 for a week-and then return to 1200 for the next couple of weeks. This could give you the best of both worlds if you actually do need that added boost-but you wouldn't be going so low all of the time-and possibly not taking in the nutrients your body needs.