It's fine to disagree, but to suggest that he's "confused" when he's stated that so clearly is kind of condescending.
I think he may be right, and I think the "ugly == trustworthy" idea is also lent credence by the hideous ads in small newspapers, in "Coupon Clipper" type mass-mailings, ugly signs for small local businesses, etc.
Websites, advertisements, et al. do not exist in a vacuum. If websites "sell despite being ugly" then the whole design business is a scam, and at the end of the day you've got a much more complex situation to explain. What does Occam's razor tell you about that?
The point he's making is that design sends a message. Certain types of "bad" design included. And that certain types of "bad" design send a message that may actually appeal to some users. Is that really so elaborate, so confused?
I always used craigslist's success in spite of ugliness as my reason for not thinking hard about style. But people expect classifieds to be ugly. People don't expect the place where they put their photos to be ugly. I've contracted a designer.
I think some "pretty" design smells like salesmanship to the savvy consumer, and this is reinforced by the fact that many of the most valuable sites (Craigslist, Amazon, Google, Ebay, Gmail, Del.icio.us, Reddit) aren't pretty to look at.
This isn't about usability and it isn't about simplicity. It's about the spectrum of ugly ranging to beauty and whether people have a bias against pretty/slick design (I think that a lot of people do).
I don't know whether or if this translates to design though.
I think what he means to say is that (a) simplicity is so important that simple and ugly works better than beautiful and complex, and (b) if you have enough drawing power by other means, you can get away with bad design.