Stages You Can Go Through As You Improve Your People Skills
Looking back on my own progression from hard-case mega dork to contented average guy, I went through several different stages as my social skills improved. Browsing through various forums, and from feedback I've gotten directly, I've also seen other guys at one stage or another. I'll lay them out so you'll have a better idea of what to expect in the future, and to possibly make you feel better if you currently feel stuck in a bad place.

The obvious disclaimer is that no one really goes through concrete, isolated stages in a concise, tidy order. They're more just a way of illustrating general ideas. The actual process varies between people and is much more disorderly and blurred together. Not everyone may literally go through these stages I've laid out (e.g., if your people skills are half-decent you may only experience later ones). Certain things may not apply to you. You may experience aspects of several stages at once. You may be be in different stages for different parts of yourself (e.g., with most people you're okay, but with certain types you're much more behind). Like I said, it's much more messy in real life. Here they are (oh, after writing them I found they fit that classic progression from unconscious incompetence to unconscious competence fairly well):

The blissfully ignorant stage
I'd say this was me in high-school. This is when your social abilities are lacking but you're not all that aware of it yet.

Certain things may not be on your radar at all (e.g., the concepts of grooming and dressing half-decently eluded me until my late teens.)
For other areas you may have a distorted sense of how you're doing (e.g., you fancy yourself a sophisticated, witty intellectual but most people would describe you as an abrasive, argumentative dork.)
You may have a tendency to fool yourself about your problems and have defense mechanisms in place to protect your ego.
You may realize you're lacking socially, but you're relatively optimistic about the future. Your thinking may be along the lines of, "Next semester will be different."
Regarding your weak areas, you can have a tendency to not take any action and instead rely on the universe to bring you what you want.
In this stage, and other ones, you can realize you're behind in some areas, but have a wrong idea of what you need to do to address the problem (e.g., you believe the solution is learning tricks to make people like you).
This is not to say you never get insecure or depressed at this stage, but you're largely unaware of your issues.

After this phase you realize you need to improve but you can be in many different states of mind:

Insecure, down in the dumps phase
At some point you'll start to transition away from blissful ignorance as the magnitude of your weaknesses hits you. You now realize that your various faults are the cause of your lack of friends, personality flaws, etc. This stage is characterized by depressed feelings, from mildly mopeyness to being really, really down. You may never really experience this stage, and instead jump into the later ones, or it could be relatively mild or short-lived.

As the name implies, you're generally insecure and down on yourself.
Your problems occupy your thoughts a great deal.
You feel like you don't have the first clue about what to do to escape your condition, which naturally makes you feel worse.
Or you could take some steps to improve your situation, but they don't amount to much and make you get further discouraged.
Cognitive distortions are common: One bad conversation means you're a loser for all time, one ambiguous look is interpreted as a sign of withering rejection, you just know all your coworkers hate you, etc.
Your depressed mood colors your thinking negatively. A big part of getting over this stage is getting a handle on these destructive thought processes.
You can feel so down on life and lacking in confidence that you don't want to try anything ("What's the point? I'll get rejected/make an idiot of myself/not have anything to say")
You're likely to give up after small setbacks ("I smiled at them and they did nothing. I knew I was a loser. There's no point in trying to get to know people. I can't win. If I fail then I feel bad. If I have some success then I'll feel even worse when I just screw up down the road after I've gotten my hopes up.")
Your poor mood can hinder your abilities to improve yourself because you can not feel like talking to anyone. You may get invited to a party, come up with several scenarios about how it'll be a disappointing waste of time, then decide it's not worth going.
You can feel caught in a Catch-22 in that you need to be around people to not be a such a loser, but you can't be around people because you don't want them to see what a loser you are.
At it's worst, your mind can almost have a caged animal quality to it - one minute you feel frantic and desperate, the next helpless and despondent.

Hitting bottom
This doesn't happen to everyone either, but many people who have recovered from their social ineptitude remember a specific time where they feel like they hit bottom.

The pathetic nature of your situation just hits you all at once and you crumble.
It can be an ultimately positive experience because you finally start on a path to seriously improving yourself.
You finally realize where you stand in life and that you need to do something about it.
After it's over you start to work on eliminating your problems in a more dispassionate, systematic way.

Temporary over-confidence phase
This is another one that doesn't happen to everyone. It happens when you first start getting serious about improving and you come across some material that seems really helpful. For a while you can get a bit deluded and think that just because you've read the information and understand it intellectually, that you actually have the ability to apply it in the real world.

The material psyches you up, fills you with hope, and makes you feel like you can conquer the world. That's one contributor.
You're just learning about a new area and making frequent large leaps in your understanding of it compared to how you were before. You feel like the man for learning so much so quickly. Unfortunately you lack perspective about how good your are in the grand scheme of things (i.e., you're a beginner) and confuse feeling like the man, for actually being the man.
Your confidence may cause you to take some action, but you're probably not objectively doing as well as your pumped up emotional state leads you to believe you are at the time.
Eventually it sinks in that just because you've read some helpful information it doesn't mean you can apply the skills in real life.
If you hit bottom, you may do so before passing through this phase. Or you may start making progress, feel over-confident for a bit, then hit bottom after you later realize you weren't in nearly as good shape as you thought you were.

The rocky ascent, mood swings stage
This phase occurs when you start seeing some initial results, are committed to improving, but your actions and thoughts are still influenced a lot by your unproductive habits and weaknesses. You're on the road to improvement, and you're moving upwards to a place where you'll be over your problems, but the ascent has a lot of ups and downs. The biggest characteristic of this stage is swinging moods. One day you'll be doing well and you'll feel super human. But then something bad will happen and you'll feel moody and discouraged. Then you'll feel fired up again and like everything is going to be a-okay from here on out. Then you'll feel like it's all hopeless again and that you're backsliding...

This stage can happen at the steepest part of the learning curve for a particular area.
You likely have a background desperation to get over your problems as soon as you can, which contributes to the emotional ups and downs.
In general, you'll tend to read too much into little things and make exaggerated projections about what they mean for your future (e.g., if you have a good conversation with someone, you conclude you're going to have a busy social life by the end of the month. If someone doesn't talk to you that day, it means you're a loser who will always be a lonely reject.)
Having a mindset where you're looking for a magic bullet can contribute to these mood swings as well. You'll read some inspirational passage or seemingly profound piece of advice and feel psyched up for a day or two. Then you'll be bummed when the feeling inevitably wears off and it turns out you weren't cured after all.

The problem with this stage is that when you're in the middle of it you lack perspective and are out of touch with the larger picture. That's why little things that are quite trivial in hindsight seem to carry so much importance. Whether someone says 'hi' back to you when you greet them isn't a big deal at all, but at the time you don't know how relatively important or unimportant it is compared to other things, so you blow it out of proportion.

What helps is having a realistic idea beforehand about the path ahead of you and the progress you can make. If you know you've still got a year or more of work ahead of you won't get so freaked out because you're not magically becoming cured overnight. It also helps to pull back from your day-to-day battles and focus on your overall growth. In the grand scheme of things you're slowly creeping upward, even though within one day or one week your fortunes swing wildly. Think of a stock that fluctuates a lot in price but still ends up being worth more at the end of every year.

That misleading first time you feel 'on'

Finally, there's a phenomenon that can happen, usually during this stage, that can do a lot to mislead you and mess with your head. What happens is that you're trying to improve your skills in a particular, tricky area and you have an exceptionally good session. For some reason you're just 'on'. You're hyper-confident and energetic and you accomplish more than you ever have before. You do some things for the first time ever. Maybe you're at a party and you spend the night fearlessly working the room and talking to people, when normally all you'd have the courage to do is talk to the two people you came with. Or you could have spent the entire night tearing up the dance floor when before you were too inhibited to dance with your friends. You leave the party/club/get together buzzing with energy. You can't believe what a good night you had. You can't fall asleep when you get home. Wow, you've finally turned a corner. The worst is over. You're going to be fine from now on.

So how can this mess you up? Well first, that one good night never ends up being the turning point it appeared to be at the time. It was just a deceptive anomaly. You had an abnormally good outcome that one time, but you'll regress back to your more average behavior. You'll have plenty more lackluster, mediocre, and discouraging showings before you finally hone your people skills to a reasonable standard. There will be future parties where you'll be shy again. It's really discouraging the next time you go out after that first exceptionally good night. You think you're going to be 'on' again, but you instead find you're your old awkward self. You can fall into the trap of thinking you can only function when you're in that intoxicating ultra-confident state. You try to hit on the magic way to recreate it at will. But it's a red herring because you can never create an emotion on demand consistently. If that was possible every athlete would put themselves into 'The Zone' before every game.

Nope, you're going to have your good days and your bad, and a lot of average ones too. You'll never have as much control as you'd like over when you have which. The important thing is to slowly increase your competency when you're in your 'normal' state. It's also important to get to the point where you can perform socially in spite of your mood. If your social abilities are lacking you may only be able to function if you're super hyped up. But if they're decent then you can use them even if you're not totally feeling it.

Finally, your social super powers during those magic nights aren't as great as they seem. So you were super confident and you spent all night talking to strangers at the bar? You were in a great mood so naturally you felt like you were setting the room on fire, but one day you'll look back and realize that more than you'd like to admit, you were just being some weird hyper guy running around spouting random conversation at people. It was great compared to your general ineptitude at the time, but contrasted to true social savvy it wasn't that stellar. Or that first night you tore up the dance floor? Looking back you were probably being a bit of a spazz. But whatever, it's all part of the learning process. Everyone screws up when they're a beginner.

The coasting to the finish line phase
You reach this stage when you feel like you've gotten over the hump and things are finally starting to click into place. You may still have a lot of work to do to get to the level you want, but it doesn't feel like such a struggle anymore. If you continue to put in the time you know you'll get there sooner or later.

By this time you've likely hit on an effective way to improve. Before you may have traveled down a few dead ends, but now you think you've got it. For example, I started making the most progress when I focused on being a better person overall instead of looking for interpersonal tricks or magic insights to solve my problems overnight.
You've probably met some of your initial goals by this point and can thus relax a little. Your strivings for improvement aren't accompanied by the urgency and desperation they were before. For example, if your overall goal is to get better with people, you may have met your initial goal of getting a regular group of friends to hang out with.
Like I said, there may still be challenges and setbacks ahead of you before you get to the finish line, but the biggest problems are gone and socializing is much more enjoyable for you now. Working on your issues is more interesting and rewarding now, when before you had to struggle with the littlest things. If you sit down with some people, you may still want to work on your conversation skills, but you can have a fun chat as you do so. Before it would have been a frustrating ordeal to even have a five-minute exchange with someone. Now you're tweaking little details and enjoying the comfort that things are falling into place.

The end (sort of)
There's never really a clear end to this kind of thing, you can always improve further, but one day you'll get to the point where you've more or less got the kind of life you want and you don't need to think about how your social skills are doing every minute. You can hang out with your friends and have a good time without really thinking about how you do it.

The thing is you don't really know the end for you until you get there. When you're first starting off your dreams may be quite ambitious, pie in the sky even. But when you get to a certain point you may realize that's where you're happy to be and you really don't need to go any further.
You're comfortable and content where you are. If you had to stay at this stage forever you could live with it.
You may occasionally backslide into your old ways, but overall life is good and you have the skills to recover quickly.
Little things that you used to struggle with are easy. You may even eventually start to lose touch with how hard they used to be for you, because you take your competence with them for granted.
You may still have future goals or extra heights you want to climb to, but you're going to tackle them from a solid, calm, happy base. And they're more optional enhancements, rather than essential components of your very happiness.

This progression was from Socially Below Average to Socially Average. In a way you're back at the beginning again. You could theoretically make the journey to Socially Above Average, but in your current average state you'd be unconsciously ignorant about many of the things very socially competent people take for granted. Average is just average after all. That's not to say you'd go through the same stages again, you'd probably go through different ones. It's just food for thought, that what's the end in one way is the beginning in another. And it shows how amorphous this whole idea of stages is. Can't take those too literally.