It really depends on what job you're looking for.
In some places, portfolios and having green hairs are worth more than work experience (e.g. some firms.) In other places, they want designers who got some "mental toughness" because of how stressful the job is (e.g. print shops.) And personality is important everywhere.
One thing I can say about portfolios being overrated; sometimes yes they are:
If you go work for a place of production, like a printer, they care less about how nicely you added your stylish Helvetica Neue Extra-Light @12pts in the middle of a white poster; first, 99.9% of their clients will hate that non-practical style and second, they don't want to hire people who took 3 weeks to create 1 single poster. The major part of their target market wants BIG BOLD BIGGER HUGE MY-LOGO-IS-TOO-SMALL and all kind of "pizza" layouts as I call them.
The printers also usually look for designers who won't go cry in the bathroom every 30 minutes because of the stress or because they can't take criticisms from the press operators, the clients, the guy at the binding, the salesmen, etc. They want people who learn quickly, anticipate problems and have a good memory for details. So yes, portfolio there is secondary; if they hire someone who isn't too quick or good at design, they know that person will have time and the opportunities to improve their skills, and they'll give the design projects to seniors or the designer the client wants to work with.
On a personal note, I can tell you portfolios and CV with ribbons are laughed at and then put on the pile of "funny stuff" in big printer shop. When we hired people, we looked way more at the CV and the potential creativity to fix issues than the design style. In fact, CV and portfolio that were too "clownish" or too artsy were the first ones dismissed; first reason is because these people would actually show they didn't know the standards (e.g. like sending a packaging box type of cv, you better do it right or not at all...) and second because the designer showed he/she doesn't understand the scope of the job. Times New Roman CV with a clean layout were often the winners to get to the interview, and then the rest depends on the personality more than the portfolio. Being a good designer there isn't about how fancy your designs are but more about how perfect, fast, flexible and nice you can create it... (in that order.)
But for a job in design in a firm or creative studio, they might enjoy seeing nice portfolios, CV that come in a DIY box and they do have more time for brainstorming and Helvetica 12pts layouts. They usually look at the potential for creativity more than experience for new designers; do they "have it" or not. Some people really don't and they're a lot of work to raise to a certain level. They also want someone who fits well with their team's personality and might even prefer designers who are more laid back and very creative. Working in a team when creating design isn't only about how good you technically are but also how much you help in the brainstorming sessions; nice layouts are often the work of a team of many designers. So again, portfolio is not what will get you hired but it helps a lot still. If you have a crappy type of individualistic personality, a big ego and you're not very flexible with your style, your portfolio can be the best they've seen, you probably won't get hired anyway.
My personal experience on this, having worked in both print and design studio is: the design studio often ask printers for technical stuff and get a lot of their technical training there; and just "do the best they can" as long it "looks good" and as it should. So "real" technical skills there are secondary but a nice bonus if you have them.
If a designer works with a group of dev or a website design firm, then they might also prefer someone with a practical design style and who is aware that their design needs to be easy or efficient when integrated into apps or websites. If the portfolio is mainly containing print designs, that might not impress them much and in fact I wouldn't be surprised they even get shivers down their spines just thinking of the horrible layers of Photoshop.
In both cases, I think employers look more at the potential rather
than what was really accomplished.
But online, portfolios are very important:
If you're a freelancer, you need to have a solid portfolio unless you're a very good salesperson. You don't always have the opportunity to make contact with the potential clients before they see how you work and you'll be dismissed just because your portfolio doesn't look good.
You could talk about your exploits in design, clients might not care at all and it's possible it means nothing to them. But for some reasons, I think "badges" of winning contests and that kind of stuff impress some clients who don't have any experience in hiring freelancers; more than a good CV actually. That's why you'll see painters doing graphic design layouts even though they have no clue about InDesign and Illustrator or even fonts.
There's clients who even think you can't do a business card or a logo because your portfolio "only" contains books, billboards, packaging, etc. Portfolio with a lot of different samples of your work will help alot when the client is "shopping" for a designer.
Again, not something that will get you hired even if you have a very big experience. In some domains, if you have experience but again a bad personality to fit the team or to LEARN, they'll prefer to hire a beginner who is more "malleable" and hope to keep working with that person for a long time.
Online, CV can help but frankly, I think people judge more the portfolio than the accomplishments. It does help though with clients who are themselves very experienced in hiring designers and coders, or had previously bad experiences hiring beginners (or liars.)
Over time, clients learn what to ask for and to not get blinded by a nice portfolio. I see a lot of fake portfolios online that are impossible to print or would be too expensive to produce; I already know I wouldn't hire these designers because of this.
It's very expensive for employers to hire new people, and there's usually a lot of candidates with similar experience. The employer is betting his/her money on the one that will be the best investment on long term. It's a bit the same with clients who hire freelancers for their own serious projects or firm.
For coders and web developers:
Well, I supposed efficient and beautiful code is appreciated if you get hire in a company.
And for freelance, I'm sure it's very difficult for them since they don't always have any control on the design part but that's still what a lot of clients look for; clients can't always appreciate how good your coding skills are, but beauty of layout is something anyone can judge easily!
The thing with jobs that are more technical is that if you were hired
and work for a long time in places that already have a solid
reputation of quality, this will be used to judge your skills. A lot of experience in very small places or bad ones doesn't always inspire employers. And it's even worse if you had tons of small jobs every 6-12 months.
As for anything, balance is the safe zone! Average/good portfolio and
average/good experience, or great salesperson qualities work fine.