I've heard both but personally prefer dēmən. Dāmən just sounds goofy to me, like someone trying to pronounce Gaelic (or Welsh!) without having learned anything about it first.

I wish some doctoral student in classics would write a blog post and settle the matter once and for all, but in the meantime it seems to come down to personal preference. There's precedent in other English words for either pronunciation (e.g. aeon, aegis, archaeology, Athenaeum, and Caesar on the one hand; aero-, faerie, and maelstrom on the other).

Until someone who actually knows what they're talking about weighs in, I'm tossing this whole argument in the same dustbin as emacs vs. vi and tabs vs. spaces. There are better things to waste our time on. :)