Buulding iteratively can reduce bugs and improve quality other things being equal. The problem with how Agile methods sometimes get implemented in practice is that an excess focus on quick-and-dirty iteration to the exclusion of everything else leads to having mountains of very poor quality code, with little to no support structure around it in the form of broader design or documentation. Agile methods advocate for growing these kinds of support structures via refactoring, but this is often not done to anywhere near an adequate extent.