Take job interviews for example. I hold a CS degree from a major university and my business is a website that so far gets 500,000 pageviews a month and is profitable. It was coded and designed by me from scratch; its server is administered and monitored by me; its community and customer support is managed by me. Given these accomplishments I would say I have a reasonable grasp of the art of web programming. But put me in a job interview situation where an interviewer asks me to write an implementation of something basic like a linked list and I'll probably manage to screw it up somehow. Then when I get sent home and I sit down in front of my monitor, I'll have it done in 5 minutes. Does my being unable to cope with programming interview situations make me a bad programmer? Does being unable to cope with a math exam make one a bad math researcher?
Edit: though on the whole I do agree that degrees nowadays are being handed out like candy and far to often to people completely undeserving of them.