Short answer: Oh my god yes.
Earlier today I got a phone call from a student who was averaging 164 on her practice LSATs, but scored a 160 on her actual. She has a 4.0 from a major public university, and she's been hearing conflicting information on whether or not she should retake the LSAT, or go ahead and trust her stellar grades to get her into a top 14. Without hesitation, I told her to retake. Here's why:
1) Dramatically better chances of admission at T-14s
I loaded a 4.0/160 into the LSAC's UGPA and LSAT Score Search tool, and chose the University of Texas as a random, representative T-14 law school. At UT, the tool estimated between a 27 and 38 percent chance of admission with these numbers. Bumping it up to a 4.0/164, the same tool estimates between a 55 and 66 percent chance of admission. Yes, that's right: Four points doubled the chances of admission at this school.
2) Dramatically better chances of scholarships at "safety" schools
Choosing UC Irvine as a random, representative outside-the-top-14 "safety" school for this student, a 4.0/160 shows a 66 to 80 percent chance of admission while a 4.0/164 shows an 88 to 98 percent chance. Glancing at the ABA 509 report for Irvine, we see that UCI gives a whopping 93 percent of its class some scholarship assistance, with slightly over half of the course getting over 50% of their tuition paid for. Also looking at the 509, we see that 160 is exactly the 25th percentile LSAT score at Irvine, while 164 is just a hair below the 75th percentile at that school (165). With a 160, Irvine might actually deny this candidate admission. (I doubt it, but it's possible.) But with a 164, this candidate starts looking like a shoo-in for admission and a lock for tens or hundreds of thousands of dollars of tuition discounts.
3) 165+ is definitely in play
This student was averaging a 164 on practice tests before taking the September LSAT, and achieved a 160, which is well within normal fluctuations for a student of this level. (Most students have a plus-or-minus of at least three or four points around the mean.) The 160 was unfortunate, but not unexpected... something like tossing five tails in a row. Not likely, but not shocking. But what if it had turned out to be five heads in a row, instead of five tails? This same student, without changing strategies or learning anything new about the test, could score 168 if she took the test again tomorrow.
Furthermore, with a few more weeks or months of prep under her belt, this student could bump that practice average up from 164 to 166 or higher, thereby bringing 170 into her range of possible outcomes. If that happens, the "unfortunate" 160 will turn out to be the best thing that ever happened to her. If she'd gotten a 164 on her first actual, she'd probably be off to a great, but not legendary, law school. But if the 160 forces a retake, and the retake results in something closer to 170, suddenly we start to consider the possibility of Harvard, Stanford, and Yale. I've seen it happen.
The LSAT is the primary determinant of where you'll attend law school and how much you'll pay to go there. Don't sell yourself short.