It sounds like you're playing with the same people consistently, and I imagine everyone there has the same opinion on the matter- so I can see why you wouldn't have an issue "not allowing that sort of thing," as you put it.
I personally switch between the two, both as DM and player. I'll usually start by speaking in character, to get the idea of the character across, and then switch to stating what the character is doing or saying because it does move things along and get ideas across easier for me to be speaking directly to the players rather than to their characters through an NPC.
Later on to reinforce the characters' personality, or even better to react to something important, stupid, or insensitive the characters have said, I'll switch back to speaking in character for a touch.
However I don't require or even request speaking in character at my tables- some people have fun with it, others don't.
I suspect that you might be thinking of what some of my players pejoratively call "tea parties:" some of them have joined games and had 2-3 hours of the DM and other players all talking in character, being silly, and never leaving the tavern to start the supposed adventure that was stated on the game page.