The whole rotating weight thing comes partly from the old idea that 'a pound off the wheels is worth 2 off the frame' and has, over time, become one of those secret bits of knowledge that cycling seems to accumulate.
Here is the best explanation I've found;
How can it be that wheel inertial forces are nearly insignificant, when the advertisements say that inertia is so important? Quite simply, inertial forces are a function of acceleration. In bike racing this peak acceleration is about .1 to .2 g’s and is generally only seen when beginning from an initial velocity of 0 (see criterium race data in Appendix D ). Furthermore, the 0.3kg/0.66lb difference in wheels, even if this mass is out at the rim, is so small compared to your body mass that the differences in wheel inertia will be unperceivable. Any difference in acceleration due to bicycle wheels that is claimed by your riding buddies is primarily due to cognitive dissonance, or the placebo effect (they paid a lot of money for the wheels so there must be some perceivable gain).
http://biketechreview.com/reviews/wheels/63-wheel-performance
In summary, wheels account for almost 10% of the total power required to race your bike and the dominant factor in wheel performance is aerodynamics. Wheel mass is a second order effect (nearly 10 times less significant) and wheel inertia is a third order effect (nearly 100 times less significant).