I disagree. There was a study done (which I saw on a TV show about bullying, so I have no reference to offer--sorry about that) that said that the majority of the time, if a person steps up to say "Hey, that's not cool," bullying stops. (
www.bullying.org says 57% of the time, it stops within 10 seconds.)
I think there's nothing wrong with saying, "cut it out." Telling an adult becomes tattling in many situations. I'd save that for a last resort.
Bullies tend to pick on kids who are alone. Sticking together is a good strategy. No, it didn't work this particular time. But that doesn't mean it's a bad idea. More kids = more power.
And personally, if my child were punished for standing up (verbally) for a friend against a bully, I'd argue his case and support him through it. He's doing the right thing!