This is an interesting thread!
I'm currently studying at Leeds College of Music, which I'm surprised to find hasn't been mentioned yet- maybe I chose the wrong institute. I'm studying what's called 'Popular Music Studies'. It's a combination of group and individual playing with modules on the industry, cultural theory, experimentation, journalism etc...
I'm actually just about to start a case study on the 'validity' (a word used very loosely) of the study of popular music at HE. It's an interesting subject.
I think the issue of whether they are worth your time is entirely down to the individual. I've found that the main benefit of being at an institute is meeting other musicians/producers with which to work. I know that these are the people who I will be conducting work with later on in life. I've met plenty of people who I know are going to be incredibly successful. It's also shown me many different pathways to follow in terms of career, giving me a glimpse of a world i didn't know was out there. Also, as has been mentioned before, it gives me many transferrable skills.
However, there are of course downsides to this kind of education. It's costing a LOT of money, something that incidentally, can work as an incentive. I also know very well that having a degree in music will by no means secure a job within the industry. I agree that it's not a way to guarantee that you'll be a good musician.
I think that it's all what you take from it. Lots of people have already made this point, and I totally agree.
What's everybody else's thoughts on LCM? Has anyone else studied there?