IMO, room for both, without one or the other I'd be a lesser musician. Right now I'm in a band where no one reads music, they're all excellent players and one is a great songwriter. So I rely on learning songs by ear. Maybe a really crude chord chart at most, since my brain at 65 yrs old doesn't remember like it used to. I can pick up stuff really fast, and since I have a decent understanding of theory and changes, I can usually anticipate where the song is going chord-wise.
now in my practice room, its a different story - virtually everything that I play is on the written page (except scales and arpeggios, and even then I'm often reading them). It helps me with learning patterns and fingerings (particularly important on upright bass) in a way that I cannot if playing by ear. Here's an example - one of the things I work on are chromatic exercises in tenths (from Ray Brown Method book). Once you know the pattern, its easy to play without reading, but if you really want to know the fingerboard and where you are at any given point, I need to read them.
Someone earlier posted that the best musicians they know have both skills totally mastered - they can read anything which allows them to play complex stuff without stopping to learn it by ear, but they can also "hear and play" stuff on the fly that isn't written down.