I had a good time sparring/grappling with some guys down the street today. And, as such, I am constantly reminded that I need more training. Distance, timing, rhythm, endurance, sports specific strength-- if you don't practice fighting, you'll never be the best you can be. Drills, kata, mitt work, heavy bags, wooden dummies and what-have-you are all great, but if you fail to actually practice fighting, you are missing something very valuable.
Sparring is not the end-all-be-all of combat, but it is a very useful tool and is closer to actual combat than some other training you can do. I believe that if a teacher tells you not to spar, he is doing you a disservice and I would actually question whether or not his system was effective. Now, I understand that it is impractical to jab your sparring opponents in the eyes or rip out their trachea with an eagle claw in training, but sparring with rules or gear builds the skills (such as timing, distance, and rhythm) for the other techniques to be used in actual combat. Also, if you don't know what it's like to move around an opponent or have him really try to attack you and you don't (God forbid) know what it's like to take a hit, you're in for a heck of a surprise when you actually have to defend yourself.
Also, spar with anyone you can: big, small, strong, weak, fast, slow, trained, untrained, long limbs, short limbs, fat, thin-- whatever you can get. Doing so will allow you to understand what can and can't be done on certain people and will help you to develop overall skills that will be useful in real life combat, because you don't always fight somebody in your weight class in reality. Also, think about sparring in different places-- the dojo or the gym is not the only place you fight. Try to spar outside sometime, but be aware of your surrounding and be careful of slamming your training partners. Also, where long sleeves and pants if you plan on grappling outside.
Whatever style you practice, you need to spar. You don't have to spar all the time, but you do need to do it. Trust me, if you paired off martial artists who spar and those who don't, you'd find that more often than not the ones who spar would come out on top in a fight.
That's all I have for you today. Until next time, good luck and train hard.