I've always preferred learning songs by ear, even though I can read music (albeit painfully). However, I think a lot of that's due to the types of songs I prefer to play (i.e. solo blues, folk, bluegrass). I agree with Jenny's point that it it doesn't matter how you learn, as long as it means something. All that being said, I'd certainly encourage any musician to learn how to read music: there's just so much music out there, and you can't get all of it on tape, CD or vinyl. Being able to read music is just another tool and another way to expand one's repertoire and horizons.