[Twycross]

My school is somewhere in the middle of the two extremes. Kata are used as the test medium to gain rank in the system, because they are standardized measures of technique, but they are not regared as vitally important. Our view is that they enhance physical coordination, good form, and also train students in situational options. That is, show practitioners just how many things they can do to an opponent, so in an actual fight, when katas have gone to hell, they still have a huge arsenal of ideas from which to draw their next move.
But our school is not really true Kenpo karate. Our instructor has studied in half a dozen different martial arts, and has infused elements of Thai boxing and brazilian jujitsu with the karate. As a result, we fight better than traditional schools, but our technique is bastardized.