Little experiment: by a show of hands of people reading this post, who do you personally know is like really good (I mean like you're at known socials in known cities and you have like many people trying waiting in "line" for a dance) purely by taking classes? The answer is ZERO! Social dancing is important.... like if you want to learn how to dance non-choreographed, you need to social dance. Makes sense right?
Picture this: you go to high school or college. You have to study, but don't have to take any tests. Sounds silly right?
Why study then? Yeah you'll absorb the info, but how do you know how well you absorbed it? How do you know what you need from the studying (to study more, to study a specific topic over another)? I don't know about you, but taking tests improves my studying... and I'm able to ask the teacher more pinpoint questions about what I need. Also, imagine if you had to study, but just had one test at the end of the year. You'd be pretty nervous, right? Part of the idea of regular tests is to make the action somewhat monotonous, so that when a test does come, you are truly tested instead of being nervous about the test itself.
The EXACT thing applies here. You social dance to test what you know, and what you need to know. It helps internalize. It helps you calm down (you go to class, it's nothing but turn patterns! How do you how to calm down and enjoy the music? Class doesn't teach this). It helps you know where you stand, and what you need to focus on in a class. You learn to be comfortable with holding the opposite sex (or same sex if that's how you roll) in close embrace... you'll do it in class, but not with nearly enough repetition to get comfortable with it for most people in my experience.
Please, please social dance. If you ABSOLUTELY, UNDER NO CIRCUMSTANCES can make time for social dancing (and I sincerely hope this isn't a cop out excuse not to because you're only hurting yourself), instead of paying for lessons, pay different teachers or people to dance with you. Clubs open too late for your taste? Find like minded individuals and set up a small social at your or someone else's house or any place with a decent floor.
Remember, even all the popular Salsa studios in NY that do choreographed shows are based on shines & social leading [Santo Rico, Karisma, Yamulee, Eddie Torres, DanceOn2, Abakua, etc]), so whatever you're learning is most likely for use in a social context / setting.
I know people who have stopped dancing and dance once in a while to enjoy it. People who dance every now and then socially, and people who take Salsa classes as glorified Zumba classes. Either is fine, but in regards to improving I'd probably take dancing socially every now and then rather than taking lessons every now and then.