In general, standing techniques are no more or less practical or useful than grappling techniques. As stated before, however, one of the primary foci of training in the martial arts for the sake of learning the art itself is the knowledge of how to fight and survive in a real fight without getting hurt oneself. A martial artist can rely on standing techniques, and if he or she is good enough, can take out his or her opponent quickly and without resorting to ground/grappling techniques and vice versa for grappling. However, I feel that if a martial artist is to be successful, he or she CANNOT rely on only one or the other. Yes, a karate practicioner should be good enough to take out his opponent quickly and probably on his feet, but to supplement and broaden that artist's skills, knowledge of groundfighting and grappling techniques is necessary. And here, I do not simply mean the sport of groundfighting or sports elements of grappling, where the goal is to pin an opponent or to make him or her tap out, but rather a focus on techniques that will stop your opponent cold or take him or her out of the fight. As always, the focus of training for the purpose of learning the martial arts (unless one is training specifically for sport) is to learn the art and learn how to apply it.
On another note, I for one would rather AVOID taking a knife or a hit in a fight, unless it was to prevent a greater hurt (ex: I would gladly take a knife wound to my hand in order to pull a knife away from my throat if someone was holding it to my neck). I'm prepared to take hits or injuries, but the best martial artists in the world are those who can emerge from a fight WITHOUT taking a hit at all. This also applies to groundfighting, not just standing arts, in that on the ground one should endeavour to avoid getting into positions that cause injury. The more you get hurt, the more you will continue to get hurt. To learn how to avoid injury and blows, one needs to train in the art seriously, learn its intricacies, and learn how to practically apply the art to all situations, or as many as possible. For this, sparring is a must, and I agree with several of the earlier comments that dojangs have erred in replacing sparring with more forms. It is only through fighting that one learns to fight. Before sparring, however, must also come the learning of the techniques. A proper standing artist, one who has learned his or her techniques properly should be able to counter whatever an opponent throws at him or her, and defeat the opponent without difficulty. That's the only difference between grappling and standing fighting styles, since both are effective if one trains properly: the skill of the artist in question. A good martial artist who recognizes the strengths and weaknesses of his art will know where he is weak and try to avoid situations that play to his weaknesses. To supplement the art, a martial artist SHOULD learn techniques from other styles that shore up his art's weaknesses, however, he should still try to maintain the strengths of his own art. In other words, don't learn something that hurts your own style.
In the end (since I know I'm rambling somewhat, here, but it's a fun topic, so I hope you'll all forgive me), a martial artist should learn how to apply her own style to as many different situations as possible through sparring and learning techniques through both forms and other forms of training, and she should also try to expand her own PERSONAL style (since everyone has a different body and way of fighting, and one shouldn't limit oneself by rigid stylistic strictures if it doesn't work for oneself) by incorporating other techinques. The only way to win a fight is to train well. It's not just about grappling or standing techniques, it's about how well you have trained in your own style and how well you have prepared yourself in your training for the practical needs you will encounter outside the dojang.
--Cliarlaoch
PS: By the way, GREAT TOPIC on this thread! Got my brain's old juices flowing! Thanks for putting it up!