No the rear seat did not fold down. The only model offered with the manual transmission, at least in our town, was the base model, which is VERY plain!! If you can afford the extra $1000-2000 I would consider seriously the Versa Note. This is rated much better by Consumer's Report, has a better reliability record (although we had no problems with our sedan) and is not quite as "stark". Both are towable with the manual transmission.
Ed