That's bunk. The right text links can cost far less per click than adwords. I spend my *advertising* money on both text links and adwords and text links are often better performers.
You do the math: on the exact same site I can buy adwords for 2 to 4 bucks per click. I can also buy a text link for $150/month that delivers 300 clicks/month. Which would you pick?
I think Google knows this and is highly motivated to squash an often superior form of advertising to their own.