UI development is not a democratic process.
When 90% of your end users are old people who rarely use a computer you have to ask them about there needs. You will collect the 'votes' and may discover you have to drop some functionalities. And maybe a slider UI will be better than a number ticker/spinner control.
Because users are dumb.
I watch them make bad decisions all the time; they want to put a box of 60 categories here in the left nav of the page; they want to have a drop-down menu for every department in the hospital. "Asking" ten users how a user-interface should work, and you'll get ten incompatible and stupid answers.
The trick to using users to get good UI is to have a programmer watch them try a prototype (or using paper prototypes). Of course, the programmer has to be tied to a chair and have his mouth duct-tape'd closed so he doesn't try and help, but the fact is when he sees the "inputs", he'll optimize the layout correctly to suit them. Programmers make fine user-interface designers when they're properly motivated.
When a user wants a drop-down for every department in the hospital you could translate this into "I want to select a department as easy and quickly as possible".
Otherwise, I agree with what you're saying about letting users "design" the UI without actually asking them to design a UI.
Ignorance is not stupidity. I agree that asking users to make UI decisions isn't the best approach, but calling users dumb because they can't use your software is dumb.