Deer can be taken with a .223. Shot placement is important. Just this past weekend we dropped a spike where is stood with one at 138 yards. The shot hit hit on the shoulder and contrary to what some think, it dropped in place. When dressing it, I saw that the shoulder had shattered and the spine was severed. I did have to put it down with a lung shot since the bullet did not hit any vitals but rather paralyzed it instead.
Last year I took a doe with one at 128 yards. It hit both lungs and the base of the heart. She ran about 40 yards. The bullet passed straight through. No blood trail at first, but plenty where she laid down. Massive internal bleeding.
Both were taken with a 55 grain ballistic tip .223. In Texas it is legal to hunt deer with any centerfire rifle. I do agree however, that shot placement is critical, but then again, that is true of any bullet.
What I do like about the .223 for deer is that you do not lose as much meat from a shoulder hit like you do with a 30-06 or similar bullet.
Here is a pic of the spike from Saturday: