It depends on what you want to do -- is your only goal to see the ball drop, or do you want to experience a vibrant evening enjoying the many faceted offerings of the City?
For a prime spot for the ball drop, yes, it's either stand & suffer or buy a package. If you don't mind being several blocks away, you can wait until around 10 p.m. but actually you get a better view watching it on tv. (I live in NJ, right outside NYC, and I've done the last minute dash to Times Square).
If the ball drop is not a must do, there's lots going on in NYC on New Year's Eve. There are usually lots of First Night events (alcohol-free) that offer a variety of programs for an inexpensive fee -- I went once and listened to a live music performance, then a dance party, then up to the top of the Empire State Building until right before midnight. It was magical! And there's always lots of bars/restaurants/clubs open that night.
But it will be COLD. Very cold, usually.