I first used this approach on internet projects based on IT methodogies like RAD (Rapid Application Development) and IAD (Iterative Application Development). RAD is a methodology for "compressing" the analysis, design, build, and test phases into a series of short, iterative development cycles. These methodologies and the followers (Extreme Programming, Agile Methods) are really well adapted for multimedia productions.

That explains why I still use this approach for game design. I find it is the most natural way to go from the initial idea to the product using a cyclic process based on prototyping to design, test, anylize and refine the work in progress. I will add more content soon on this subject.

For an introduction to this approach of Iterative Game Design Process, see the article of Eric Zimmerman.