Converting feature class with domains to SHP file

Probably the easiest way to accomplish this is to use the Domain to Table tool to convert the domain into a DBF table, join the domain table to the featureclass, then export the joined tables to shapefile, which will preserve both the original attributes and the joined description.

If you need to replicate this task often, consider turning this process into a ModelBuilder tool and turn it into a nearly one-click tool.

An easy way to do this using ArcGIS 10 is:

1. Open fc table in ArcMap and select all features.
2. Right click on any of the selected rows and choose the 'Copy Selected' option.
3. Open up excel, select the top left tab, right click select 'Paste', then save xls file.
4. Turn off all fields in shp except for unique ID field.
5. Export fc to shp.
6. Load shp and xls into ArcMap, and join xls to shp by unique ID field.
7. Export joined shp to new shp.