You're both a little bit right.
When an amp clips, it's capable of send out out double it's rated wattage. So a Solid State 200w amp can produce 400watts if you're not careful, but it will be a horrible sounding 400w. Now if you're using speakers rated at 400w or more, they shouldn't burn out. If they're 200w speakers, you'll be asking "what's that burning smell?" before too long. The answer is "Your Voice coil!".
At 100% THD (Total Harmonic Distortion) you can certainly hear the clipping induced distortion, but at 120+dB, clipping can be hard to hear. That's why a lot of amps have a clip light.
IMO clipping is a bit like smoking - it may or may not be doing damage, but I still chose not to do it. I've played in some seriously loud bands and I've never blown a speaker!