I just read (and recommend) this blog post by Dr. Noa Kageyama, on the subject of practicing. About a year ago I gave a presentation to a group of Los Angeles piano teachers entitled "Making Practice Perfect" where I explored and shared various techniques that I find useful for myself and students. Dr. Kageyama points out, however, that the attempt to be "perfect" in the practice room can actually prevent us from learning. One such reason occurs especially in conservatory environments: we want to sound good to our peers in the hallway or the practice room next door, and will avoid working on pieces or passages we aren't so confident with. Or we might avoid taking a risk with tempo or musical idea, for example, because we will (probably) sound terrible, at least at first.
As a kid, one of my friends (now concertmaster of a major American orchestra) would sometimes go over to an older friend's house (he is now the concertmaster of another major American orchestra) to practice. My friend said it helped him focus and not screw around. But I wonder if it might have also made him avoid practicing brand new repertoire, say, or trying out new interpretive or technical ideas. Now mind you, he is a great (and successful) violinist so he obviously wasn't damaged by this much, if at all, but it makes me think that it's important, in practicing, not to focus on what others think, but to listen to ourselves and evaluate how we are doing.
To my Conservatory students: ignore everyone else practicing nearby! Your job is not to impress them in a practice room - your job is to do your best on stage, in a concert or competition or audition or recording studio.
On the other hand, I remember quite vividly the experience years ago as a Fellow at the Tanglewood Music Center that I often ended up practicing in a room near Leon Fleisher's office. Being within earshot of one of the world's greatest pianists definitely made me sharpen my focus, and I had the nervewracking privilege of having him come in once or twice to advise me on something he heard me doing.