I have read somewhere that you should also try to optimize for common spelling mistakes people can make with your keywords. If the theme/category my website is about is very popular, would it be advisable to optimize for misspelled search terms, or would this affect the credibility of my site (people will notice spelling mistakes on the web site). And would this have any effect at all on my Google Ranking?
In short, which would be better - to be at the top of the google search results page for a commonly misspelled keyword, or rather have the correct spelling and appear way down the list?

Oh, you definitely don't want body content on your page to have misspelled words!! Put the misspelled keywords into your meta tags ... Personally, I wouldn't go any further than that.