It depends on the software development project. I've worked with web devs who didn't know what a finite state machine was and did fine. Right now I work at a research institution crunching genomes. Not knowing the basics that a CS degree can give you will not work in this environment.

That's not to say that you can't get these skills outside of school but I think you get a better rounding of skills in school than out in the field. I've met more devs who didn't go to school that can't work on really difficult problems than the ones who did.

Of course, selection bias and all that.