I think the main point in both arguments is that 'cotton when wet' this is the main issue, yes cotton does not perform as well as other 'when' wet. As stated above I have used cotton as a base layer (next to the skin) in sub -25 temps, without any problems, but I may also point out that during this time body temperature was self-regulated with the simple expedia of adding or removing layers as and when needed, even down to base layers. As long as the base layer doesn't get saturated in sweat, it performs its function of creating a barrier between the skin and more rougher and irritating layers without a problem.
Would I use it today? then in truth the answer would be 'No' as there are more efficient and better materials; I tend to use merino for cold weather base layers today, purely because it has become finer weaver that can be worn close to the skin, and provides a less smelly option for extended periods of time.
But even with something like merino this doesn't mean you can go out and get all sweaty, and be happy in the knowledge that your safe from the cold, that is an illusion. Layer management is still a very important part of being in the wild in extreme sub temperatures, basically take it off when your warm, and put it on when your cold, it doesn't get any easier than that.