Benefits of Paddles

Have you ever noticed that some people get an instant boost from putting on paddles while others don't? I swim with a training partner and we both hold around 1:10 "threshold" pace (per 100 yards) in training. When we put on paddles and do (as an example) 200s on the 2:35, I'll start out holding 2:25-2:30 and eventually tire out to the point of being touch and go. My training partner will hold 1:05-1:10 pretty comfortably. Does anyone have any thoughts on how this relates to training and racing? Is more paddle swimming going to make me a faster swimmer? Is it irrelevant to swimming speed without paddles? Does this indicate that I need to do more lifting to get my lats and triceps stronger? Anyone have any advice on training with paddles or stories about how paddle work has affected their racing?