Theory theory theory ... Tonality? What? Polymodal chromaticism? What?
As an amateur guitar teacher I always ask my students this question: "Do you want to learn music through playing guitar or do you want to learn to play guitar music?" The first means that it is within your interests to, in addition to learning guitar, gain knowledge of universal musical elements that are applicable to various western instruments. The second implies that you simply want to sound cool, emulate a style, and/or learn quickly. I call the first "Why" and the second "How." In actuality the Why encompasses the How (but for the sake of this paragraph I'm keeping them separate). So what's the difference? The Why method takes a lot more effort for both the student and the teacher, and also has the tendency to turn off those with no musical background. The How method yields faster, initially satisfying results but there is a definite limit to how much can be taught formally without simply going over songs (which can be done on your own, saving money).
Now, without thinking, pick "How" or "Why." If you went with your average-joe instinct, the easier, shorter method seems more desirable. In fact, that is completely natural... what's the point of the first method? The honest truth is, if you adhere strictly to the "How" you'll be able to get along just fine in the guitar world. You might even join a band and become superstars on Fuse (or what's left of MTV). Who doesn't want that?
I compare learning guitar without theory to a caveman who just discovered fire. He knows that when he rubs two rocks together they make sparks. However, he does not know the name "fire" or "spark". The caveman may be able to grasp the concept of heat by feeling it (and possibly getting burned), but he doesn't understand what heat is.
Why did I choose to learn theory? I didn't, as far as guitar goes. I began playing trumpet in 2nd grade, receiving private lessons until freshmen year in high school. When I picked up a guitar, it only seemed natural to apply the theory I already knew to guitar and learn some new things (especially switching from a monotonal to a polytonal instrument). So personally, I never had to ask myself the "How or Why?" question. With that said, my point of view on theory and musicianship is pretty biased...
As mentioned earlier, joining a rock band and clawing to fame is one of the options for the diligent, theory-illiterate guitarist. With that said, that is probably the only serious option for those kind of players (meaning besides being a hobbyist or a collector/dealer).
With an above average amount of theory, one can become a studio musician, a guitar teacher, or even an ensemble guitarist. Music on a higher level is extremely competitive. There is such thing as a musical resume, and it does take an extreme amount of work to get to a high position in this magical world of sounds. That's a common misconception parents and outsiders have as far as the nature of a musical career. The difficulties can even be seen through the mainstream bands most of UG hates. Ever notice how some bands you dislike suddenly disappear? Most likely it's because they couldn't perform on the road or even in the studio (which made the label turn to hiring studio musicians), causing them to be dropped from their label. That in itself has little to do with theory- the point is that it is not an easy task to be hired for anything relating to music.
Learning music theory tips the scale in ones favor GREATLY. Guitar stores prefer to hire teachers that will be able to teach as many students as possible and keep the students coming. The likelihood of none of the pupils wanting to learn theory is slim. Often, it doesn't even come down to the type of students one receives. A certified guitar teacher, who took and passed a test that involved deep understanding of theory, will ALWAYS get a job before an unlicensed one. Studio musicians in decent studios are pretty much expected to be machines. They are handed scores and expected to be able to reproduce them flawlessly in both rhythm and style every time. The standards are rediculously high and to say "I don't know too much theory but I'm REALLY good, trust me" is simply not enough.
Honestly though, most of the readers are not planning to dive head first into the professional musical world. Even so, one can't escape theory forever. One of the great joys of playing music is jamming with other people. What if someone were to take charge of the jam and say "blues in B," expect everyone to improvise over a simple chord progression? That's theory (duh).
Nobody treads the road of guitar without coming across some theory, even the so called prodigies with superhuman abilities understand theory. What makes them so different is that they've taken theory and put it in their own terms. Some may have even built their own musical concepts (that may or may not already exist) from the ground up and therefore have a better understanding of them.
My personal view is that knowing theory is valuable in ways beyond simply getting a decent job - its a way to become a "complete" musician. Especially in the case of the guitar and piano where the ability to harmonize with oneself and build chords, it is a crime to the instrument to refuse to aquire more knowledge when available. All it comes down to is patience and resourcefulness. There plenty of books, especially from the Berklee Press that can be of great help to those who have a good reason not to receive private lessons. Guitarism (made up word) is a mental practice as well as a physical one. Building chops and muscle memory is only half the battle.
I guess I'm going to start a series of undetermined length called "My Mentality On: ____" This could be the only one (so it wouldn't actually be a series) or I could be writing on my death bed. Who knows? It's like writing improv. Feel free to contact me with ideas/feedback. I'll write about almost anything music related, within reason. My e-mail is email@example.com.