This has not turned out to be entirely true. I do get to speak Spanish daily with my host family, who are wonderful, and with bus drivers, store clerks, etc. But you don't really hang out and have conversations with native speakers unless you truly seek out the opportunities to do so (more on that later). In reality, you will spend 90% of your time with other English speakers with varying levels of Spanish skills. So, classes are important.
I really do enjoy my class, but it is very similar to classes you will take in the US. You get out of it what you put in, and if you don't want to talk in class you probably won't improve. Grammar and written exercises are fine and good, and I can read and write Spanish pretty well, but my oral comprehension is slow and my speaking skills laughable. The only way to improve is to talk. I need to remind myself that daily because it is so painfully embarrassing to be unable to communicate. I think it is worsened because I consider myself fairly well-spoken in English and is extremely difficult to be a beginner. Just keep in mind that you don't gain anything if you don't risk something, and that something may just need to be your pride for a few weeks.
On that note, a few amusing anecdotes from class, in which pride was definitely sacrificed in the name of learning:
The other day we were practicing speaking in the past tense, and my teacher asked if I had any pets as a child. I said yes, we had 8 cats, and I wanted to explain why. I wanted to say my parents fed them, so I said, "Mis padres se comían". My teacher, without skipping a beat, just said, "Oh really, how interesting!" Now, around this time some others were looking shocked and I realized I had just said my parents eat cats! The verb I should have used was alimentar. Noted. My teacher said she just thought we were really poor :S
Last week, we had to partner up and pretend to have just run into an old friend after several years and have a conversation catching up. Two guys in my class were talking when one of them said, "Yo miré los niños". The whole class busted up laughing for a good two minutes because he said he "watched little boys". He also said "Yo lo" something, which another classmate explained means You Only Live Once and just made the watching little boys confusion even more hilarious. The verb he should have used was cuidar, to care for.
So there you have it. Yes, you will make mistakes, and yes you will probably get laughed at. But someone else will make a mistake too and you will laugh at them and then it will all be even!