That question will elicit responses from two fronts.
As a church musician for over thirty years and a musician all my life, the answer is both yes and no. There are a lot of gifted musicians that play by ear EXTREMELY WELL and never picked up a theory book. You don't need theory to know how to play music.
But, on the other hand, musicians are at a lost if he/she ever wanted to write down their creation for publication without the knowledge of music theory. Sure, they can find a vendor to transfer their sound to ink but it's more gratifying to have the knowledge to do it yourself. So the question, if music theory is over rated or not, depends on the individual and how far they want to take their skills and gift. In the movie, "Drumline" a young student told an old band director that he couldn't read music. The old band director responded, "A lot of people can't read the word toilet on a bathroom door, but that doesn't mean they don't know how to use one".