I feel that music education (ie grades etc) should encourage the development of improvisation as much as the ablity to read music. I was shocked that my nephew who is preparing for grade 5 cello cannot improvise a simple tune like "Happy Birthday". He has loads of musical ablity, but the ablity to play by ear has never been nutured.
I don't understand why improvisation as a skill is ignored by many music teachers. I believe it can be taught, although some people definately have a natural talent.