I have a similar situation. I turned in my AMCAS in early Sept. Received MCAT's...not so good. I know I can do better. This is my first time applying.
I've had most people tell me to go for it, but here's what I know from sources:
-Pre-med advisor at Northwestern says she thinks I should withdraw and apply when I'm "strongest," which means earlier in the cycle (ie, June/July) and with higher MCAT's since she thinks I can do better.
-Admissions director at East Tenn. State U says that he knows of no disadvantage to continuing the app. process as opposed to withdrawing. In other words, one shouldn't be viewed differently the next app. year if they choose to withdraw as opposed to if they apply fully to ins-state schools and are formally rejected. You're a re-applicant either way.
If you do withdraw, I would write a formal letter to all schools you withdraw from saying something about, "still desire strongly to be a physician, but are withdrawing for personal reasons...and you are interested in their school and will apply again next cycle." I say, go for reasonable in-state schools! That's what I think I'm doing.