Agree! But practice is first, theory – the second.
I believe they should go hand in hand. You learn a piece, you also learn the theory that is relevant to it. I.E variations of scales of the key signature(s) of the piece. (Arpeggios, contrary motion, staccato, etc.). You learn the different dynamic and whatever-they-are-called markings, likes legato, tenuto, all those french and german terms that most of the time need a music dictionary to find out. You learn the background of the piece, a little about the structural form of the piece. and so in learning this piece, you havn't just learnt the music, you have also learnt theory, and some other random useful things.
This may not work all the time though, you may have a student, who cannot for the life of him/her remember all of the difficult foreign names and things that they need to. In that case, you would maybe use a storyline for the piece (you should do this anyway, but in this case it could come in useful), and say, 'see this bit here, with the Sfz. THis is where someone is yelling, like in an army, very pronounced and sharp and accentuated (I dunno if that was the right word). Now here, where it says cantabile, someone in the crowd of people being yelled at has started to sing with a vioce very sweet, even the guy yelling has to shut up. As soon as this guy starts singing, the rest join in, because it makes the song sound nicer.'
Analogies are wonderful things...