Theism's noisiest opponents (Dawkins, Krauss, et al) frequently use this to attack any form of belief in God, or to defend their own belief in no God. It's what I call the Folk Argument. Does it work? My response is a qualified “no”.
Let me illustrate with an example. It seems to me that most people don't understand evolution, particularly when they say things like “I'm evolving into a better person”.
It's a hideous thing to say. If I were a proper atheist, I might even say it's blasphemous. Evolution does not make you (individual you, that is) into anything. What it does do is that if your children are better suited to the environment in which they find themselves, they are more likely to survive and produce more children with their genes. By the time any significant change has happened in the gene pool, you will be long dead.
Then, there's the whole problem of “better”. What is "better"? Better suited to the environment? But that might mean a radical departure from the values that we hold dear. For instance, it might mean the removal of all inhibitions in killing your neighbour's children. That's a very unpleasant possibility that won't suit our current environment (for which I am very thankful). But, how do we know what possible future environments we might find ourselves in, and what makes these environments better or worse than ours? Why assume that what is “good” today will be “good” tomorrow? Are these future environments "better" because they suit us better? What an ironic inversion of evolutionary theory!
I digress. My point is that though evolution is not making me (or anyone else) into a better person, many people believe it. It's a folk argument, but does it make evolution untrue? Of course, no.
(Incidentally, the only way you can argue that evolution or circumstance is making you into a better person is by believing that there is a purpose or meaning that has given rise to these processes and circumstances, and as soon as you do that, you assume that there is a God, or at least a God-pseudonym.)
Now, if we shouldn't use the folk-argument against evolution, we also shouldn't use it against theism. It's not an excuse to stop enquiry, but it does clear away much of the clutter. It's also wide-ranging in it's scope. It means that you cannot argue that belief in God is ridiculous because Mrs Smith believes that God always gives her a car-parking space whenever she goes to the shopping mall, and that's a ridiculous thing to believe. You also can't argue the Flying Spaghetti Monster, or the junk-yard of gods (where all the gods go after their respective religions have died out).
In fact, the next time an angry atheist holds forth on the folk-argument, I will be strongly tempted to respond with a folk-argument of my own – that most atheists believe that their criticism of religion serves some sort of meaningful purpose. It doesn't – if proper atheism (as distinct from folk atheism) were true, nothing would have meaning or purpose, including the atheists' dislike of religion. Our perceptions of meaning and purpose would be mere delusions that have been thrust on us randomly by a pitiless and indifferent universe that, frankly, could not care less about what you think, believe or do. The reason I might hold back with this strategy is that I know it is a folk argument.
So, the folk-argument does not settle the issue. It's good rhetoric, but poor logic.
But it does present a dilemma, hence the qualification to my initial “no”.
The dilemma is this – it's easy to dismiss Mrs Smith's God-of-the-car-park as wishful thinking, or affirmation-bias, pattern-reinforcement or whatever you'd like to call it. But Mrs Smith is not qualitatively different from anyone else in her perceptions, including the finest Oxbridge dons. If Mrs Smith cannot perceive reality, can anyone? I'd like to think that we (that means all of us, including the Mrs Smiths and the finest Oxbridge dons of the world) have the capacity to perceive the reality, even though that capacity is often flawed and is necessarily limited. If we didn't, all our enquiries and all our science are necessarily doomed from the start. We would not be able to perceive anything because our perceptions are irredeemably lost and broken.
To me, this means two things; one is that we can, and should continue to search, and the other is that the ultimate goal of that search is God. Heaven help us find Him.