Stretching is an extremely important component of fitness. However, certain types of stretching done at certain times can decrease performance. For example, if you are going to attempt a max effort squat, it would be ill advised to statically stretch your legs before attempting the lift. This is because static stretching (holding a stretched muscle for at least 20 seconds) utilizes autogenic inhibition. According to the NASM Essentials of Personal Fitness training textbook, autogenic inhibition is an inhibitory process that occurs when the neural impulses sensing tension are greater than the impulses causing muscle contraction.
So basically, when a muscle is stretched, it stimulates Golgi tendon organs within the muscle fibers. When these sensory receptors are stimulated, they override contraction activity within the muscle, causing it to relax. Golgi tendon organs are basically there to prevent muscle injury. So if you statically stretch before attempting a max effort lift, your muscles are going to be unable to produce maximal muscle contractions due to autogenic inhibition, which will in turn reduce your strength and power.
This is not to say you shouldn't stretch before working out because you should, it's highly important. Instead of statically stretching, focus on warming your muscles up through dynamic and/or active-isolated stretching. These forms of stretching are performed in sets and reps, and are held for only one or two seconds. Dynamic and active stretching work through a different pathway than static stretching. Both forms work through reciprocal inhibition. This type of inhibition will not decrease neural excitability to the degree that autogenic inhibition will.
Clark, M. & Corn, R. & Lucett, S. (2008). NASM Essentials of Personal Fitness Training. 3rd ed. USA: Lippincott Williams & Wilkins. Pg. 153,158,164-165.