It's a myth.

Very few web pages pass validation. To test this statement, visit the W3C and use their HTML and CSS Validation tools. Do a search in your favorite search engine and choose the top ranking sites, then validate them. What you will find is that top ranked sites typically do not pass validation.

This observation does not imply that invalid code will improve your rankings either, or that gross issues in code won't prevent pages from being indexed. While it's a feather in your cap to validate your code (especially if you're a programmer), it does not translate into improved rankings.

What are your thoughts? Comment below.