A new fitness buzz phrase is "muscle confusion." I think it is used in the P90x workout DVDs that have become somewhat popular recently. The idea is that you need to continually vary every exercise and variable (resistance, reps, sets, rest, etc.) all the time or the body will adapt and you will not derive any benefits after a while if you continue with that workout.
Is it a gimmick or an important concept that needs to be incorporated with your training? Well, to answer this question you need just a little exercise physiology background. The body does adapt to whatever stress is placed upon it. That is the SAID principle: Specific Adaptation to Implied Demands. This is the basis for exercise training. Another basic principle is Progressive Overload. It states, as the body adapts to stress, you need to increase the stress to continue to see improvements (as long as you don't overwhelm the body- which is an art and science).
You are stressing the body with a workout, to which it should (even after only one session) start adapting. This allows you to tolerate the workout better next time or progress some variable (resistance, speed, reps, etc.). If your goal is to improve your performance or the physical attributes (hip strength, torso stability, etc) associated with that workout, then you need to (appropriately) progressively overload the body. Over time you will see improvements in your performance or physical attributes.
How often should you vary your workouts? This is where the confusion- no pun intended-comes in. Simply, you need to balance progression (more reps, weight, sets, less time, etc.) with adaption in the context of your goals. In exercise physiology, this is termed periodization. There are many ways to periodize or systematically vary the training stimuli. A good trainer should be able to incorporate periodization into your training. Workouts can be varied each workout (termed daily undulating periodization) or every four to eight weeks (termed linear periodization).
Whichever way you choose to vary your workout, it has to be in context of your goals and done subtlely. This is where using "muscle confusion" goes awry. If your goal is to run a 5k faster you can't spend four weeks just doing yoga. Just like if your goal is to be a better baseball player, you would never want to change from a good strength and power development program to long-distance running workouts. These are not in context to your goals and may negate some of the progress you have made.
Many people just want to 'get in shape' or 'lose a few pounds'. They don't have as specific goals. However, you can't neglect the specific physical attributes you have developed (and hopefully want to continue to develop). I believe this is where P90x and others shoot themselves in the foot. I hear clients say "I am going to take a break from strength training and just run more." They simply want to vary the exercise for the sake of varying it. Big mistake. You need to look at it in terms of physical attributes. If you want more endurance, then subtlely changing some variables will allow you to do that. But, neglecting one attribute (strength in this case) to pursue another (endurance) is erroneous.
Developing high levels of fitness is a long (many years and decades) process. People don't need to constantly vary their workouts just for the sake of variety. That is just our societies ADD and our desire for quick results. Bodybuilders perpetuate these ideas, too. High-level fitness doesn't work that way. Most trainees (of whom most continue to remain beginners) need a solid foundation of proper technique work in the basics and consistent training. You don't need a completely change everything each week or month. That just negates a lot of what you worked so hard to develop. All professional, Olympic level, other high-level athletes have made it to their respective levels by mastering the basics and continually and consistently training, not by "confusing their muscles." I call gimmick.