I guess you're referring to the Stofen style diffusers. http://www.stofen.com
On occasions they're just the right tool for the job, often in a smaller space with low white ceilings and white/light coloured walls not too far from the subject. They have the singular advantage of taking up no room at all in your bag. Another higher quality diffuser that sprays light all around the room is the Gary Fong Collapsible Lightsphere http://www.garyfongestore.com/
Quite nice light in the right environment but boy do they chew the batteries up.
Skillfully used bounce flash is often your best solution in the right room
but having tried out just about every compact diffuser on the planet, I've found the Demb Flash Diffuser Pro from Joe Demb http://www.dembflashproducts.com/
delivers good results in varying environments. They are compact, power efficient, very cleverly designed and reasonably priced.
Yes, isn't it a laugh when you see shooters working outdoors with their speedlights aimed up towards the clouds. Of course none of us have ever inadvertently done that...
Back to the OP; the guy you were working with who used the diffuser you described may have been using just the right tool for the job. It depends almost entirely on the physical makeup of the room you are working in and the type of output your client needs. With practice you can assess this in a heartbeat.