People use outlining to learn the material. If you find you don't learn well with an outline, then find some other way to do it, be it more textual organization, flash cards, whatever.
No matter which "method" you choose, remember that learning the material is only step one. I disagree w/ jen's post. It is a two step process, but its not outlining and then reviewing. It's learning the material, then applying the material.
The reason it's vital to have your outline done a good couple of days before the final (if not sooner), is because you need both the time to learn the material in your outline, and then you have to practice applying the material. I'm convinced that the difference between a good grade and an "ok" grade isn't the fact that one student knew the material better than another. It's who analyzed the hypo and applied the material better.
So whatever method helps you learn best, use it, because outlining is only one step to where you need to be for exams.