Actually, I agree with not hiding functionality, but nothing (including menu items) should be enabled in the UI if it is not possible to perform that function. That is not to say developers should be lazy – don’t just disable things because it is inconvenient for you (the developer) to let them do it. If it is reasonable, leave it enabled, and lead the user through what they need to do to perform the task.
However, there are things in most programs which you really cannot do at a certain point in time, and that should be clear to the user, along with why it is not possible, and how to proceed. The user should never be left at a dead end. On the same not, however, the user should never be led to believe something is possible, only to be denied.
As I write this, I figure I do not wholeheartedly disagree, but I do disagree – like most broad, generalized statements, it is wrong, or at least not entirely right.