I've taken exactly one deer with a .223, with a match grade AR-15. I had planned to hunt does that afternoon, so naturally a big, northern white-tail buck came walking through the woods toward me. When he was broadside and 25 yards away, I took the shot. He ran 25 yards and collapsed. I had hit him perfectly: heart and lungs with a Winchester Super-X 64-grain PowerPoint. He weighed 180 lbs after field dressing.
It's perfectly legal to hunt deer with .223s and with semi-auto rifles in this state; there's no magazine size limit, either. I used the same 20-rd. mags that I use for match shooting.
I won't do it again. That was the closest shot that I have ever had at a deer. I've watched deer travel (swiftly!) for hundreds of yards after having been hit properly (heart and lungs) with .30-'06s. The woods are heavy here, with lots of places for a deer to hide and to die undiscovered. Hence, I carried a Marlin 336 in .35 Rem this season, with 200 gr Core-Lokt soft points. It works just fine.
That's my answer: if you're going to hunt deer with a .223, then use good, heavy, well-constructed bullets, know deer anatomy very well and practice a lot before the season. mljdeckard expressed that very well in the post above this one.