Doesn't upgrading ramming speed and full sail just extend the time at which they last?

Both.
And I've been 21 knots in my light sloop :P

This appears to be a false claim. Screen shot please.

that it does mate.

The most significant factor I've seen for ship speed is lag. That is, two identical ships with two sailors of identical levels with identical sailing builds sailing side-by-side will not travel at the same speed.

The game has fixed speeds that skills are supposed to make happen. So, 21 knots in any sloop should be 21 knots.

Sailing towards Isla Tormenta from Isla Perdida, I'll often see a Storm Reaper far away. As I near it, smaller ships will also appear - even though they are closer to me, they appear later because they are "shorter."

Since the light sloop is "shorter" than the war sloop, other pirates cannot see it from as far away. Therefore, the server doesn't have to relay your position to as many other pirates when you are in a light sloop. The lag (network latency) from your computer, to server, to other pirate's computers, then back to the server, then back to your computer, can sometimes be significant.

So, my theory is that the light sloop really is faster in practice, because of the ancillary (minor) lag issues. If all pirate and pirate ship movement were controlled on the server (as one might reasonably expect) instead of on the client, there would be no "speed hack" and movement rates would be consistent. That's my two cents on why the light sloop works better as my "get-me-there-quick" ship.

I agree with Edward Edgemenace. The Light Sloop has always seemed faster because of the fact that it's a Light Ship ( Although not the significant factor, but that's just what I've always thought ). The Merchant Sloop is slightly slower than the Light Sloop, even though it may not seem so. And the War Sloop is the slowest of the Sloops ( You can't see that it's slower, but it definitely is the slowest ).

The highest speed any ship can go is with Ramming Speed - a War Sloop goes to 21 Knots, a War Frigate to 20, and a War Galleon to ( I believe ) 19.