There is an argument that classroom examinations only measure the ability of the pupil to remember and regurgitate facts on the page. Additionally, many students these days are so used to using the computer that when faced with hand-writing for three hours, this can be quite a challenge!
However remembering facts is a really useful skill and helps in later business life particularly if you are working in a job where past experience or historicial decisions (e.g. legal) are important.
Workbased assessments are another way of assessing a student's competence and ability to grasp a skill, but these seem to be more useful where people are using a learned skill rather than needing to present well written work (preparing them in different ways for different roles in the future).
In my opinion there is room for both models of assessment, but your debate is for the work based learning/portfolio of evidence route for learning and gaining qualifications - the NVQ process is based on this model and is highly successful.