Perception is the key. You got to know what to do, and WHEN. Some places need you to take the breaks so the floor clears and the drinking resumes - others like the flow. In the end - it's up to ME, usually to pace it the way I see fit. That's why I get the big bucks ....... (when, exactly IS that???)
The worst thing you can do is write a set list and stick to it religeously. You need to improvise constantly, and a pre-written set will just suck the life right out of your brain. If it's a dance party or a really big affair - you can get away with a few sequences of things that always work, but in the more intimate settings ...... a loose, personal touch is better, I think.
I tried to use a set list once. Got as far as the second song and threw it on the floor - never did it again. I trust my initial feelings better than my second guesses, so I can't follow a set.
The most important thing is to communicate with the audience. It might be all show, all wallpaper, or all dance - whatever the situation - make sure it's the BEST choice for THAT moment in time - you won't get it back.
As far as breaks - in regular club dates, you HAVE to schmooze your customers, so breaks are every bit as important to the evening as the tunes. People want a hug or a story or just to see you up close (scary, huh?)
Treat your crowd like family and you won't go wrong - communication is PARAMOUNT. Watch, listen and THEN decide how to enhance the moment.
Another thing I do is - I pick rhythms, NOT songs. I determine what KIND of beat is needed next, and then find a song that fits the bill. Sometimes I'll even do a song that's not usually done in that style(like, Ipanima as a swing tune ... or whatever), just to have the right beat for the "pulse".
Just another "hat" to wear ! Add it to the collection !