I am fortunate to live in an area where there are teachers galore, and good ones at that. I began lessons which lasted for four years, combining reading sheet music and learning by ear about 50/50%, and I recorded almost all of my lessons after the first year or so. This proved to be invaluable, because I lost my teacher to a brain tumor several years ago. His instruction and inspiration continue to push me when I listen back to those ratty little tapes, and I feel lucky to have had the chance to study with him.
The tunes we worked with were usually quite complex and gratifying to play, but when I actually started playing in a band our repertoire was made up of completely different material, which I basically had to learn from scratch. Fortunatly the predominat keys were still A and D, so at least I knew where I was on the instrument, and could fake my way through pretty much anything (could and, uh, still do...).
My feelings about instruction are that, in addition to learning tunes, it's important to learn how to be a musician (even an amateur one), and, although one could certainly get through a ton of material on one's own without an instructor, sometimes we learn a lot more than songs from our teachers. I learned to play with concentration and confidence, to pay close attention to how my part functions in the group's sound, and to respect the players who came before me, since it was their work I was building upon. I was also taught that if you can learn to play without looking down at your instrument then you can devote more time to watching the gorgeous babes dancing in the crowd, an element of performance which is probably neglected in most self-study courses...