Depends on what people consider sparring...
We do several types of sparring, including ippon kumite (one point sparring), kogo kumite (alternating technique sparring), and of course, jiyu kumite (free sparring), using USA-NKF guidelines.
Free sparring, though, is going to be kept under a watchful eye, so that people aren't bashing shins and knees together by accident, or that someone's not going to get overzealous with a throw or sweep. While we're in the dojo, free sparring is still a partnered drill, designed to help each of the participants. Nobody is out to bash the other guy into submission.
Make no mistake about it, though; you're still going to get hit, and there are plenty of folks who can deliver a clean, solid shot (yet controlled) that you'll feel the next morning. You especially have to watch out for the older folks, who have developed some pretty nice timing and accuracy.
If a competition is coming up, then we'll back off on the free sparring, so that people aren't going to be entering the competition with all sorts of bumps and bruises.
Some people have asked me why we don't let people get used to hard contact on a regular basis, and I tell them this:
You want your guys to be in a healthy condition before the competition. Having them go in there limping or not at peak condition, is a handicap, and one that should be avoided.
Besides, when you're fighting in a match, you're going to have adrenaline running through you, which is going to dull a lot of your other senses. While you're going to wake up the next morning wondering what the size of that truck that ran into your body was, you're probably not going to feel the effects at that particular moment.