What has troubled me about this debate (over about 40 years of it) is that each has advocates that take pride in not being able to do the other. I've even known academic musicians that say with some pride that they haven't taken the time to learn to play by ear. Mostly, it is more in the form of a reverse snobbishness where a person takes pride in note being able to read (the dots). In no other area do so otherwise intelligent people take pride in not knowing something.

Finally, ultimately, reading music, if done properly, is playing by ear. That is, if you really read music you do not translate the symbol on the page to a button or position, but to a pitch (and duration) and then you play it. Put another way, you hear what you see and play what you hear. That is reading music, or music literacy. Plus, there are way more people in this world that really can do this than you might think and very few without the means to learn this very useful skill.