Dissociative identity disorder (DID) is still one of the most controversial diagnoses in psychology, with many professionals denying its existence. The primary objections are that the "disorder" is iatrogenic (created by the therapist) and that DID is a culture-bound syndrome not found in other cultures.
There is a considerable body of evidence in support of dissociative disorders, including DID. A couple of new studies are presented below - one refuting the iatrogenic model for DID and one supporting a sub-type of PTSD with strong dissociative tendencies.
Wikipedia offers a good summary of the current issues:
I have generally been highly skeptical of DID diagnoses, and I still believe there is a serious issue with iatrogenic causation. However, I have seen extreme dissociation in clients (fitting the structural dissociation model - more on this below) in which clients do not necessarily have a different personality, but regress to a much younger and wounded self-state that is totally isolated from the adult self.
What the main debate today concerns is the question - can child abuse causes DID. Colin A. Ross points out the errors of logic and scholarship that the quite vocal disbelievers of trauma based disorders, Piper and Merskey, have made in their publications concerning DID, but even with the doubt raised by Ross there is still debate today.  Ross also disagrees with Piper and Merskey's conclusion that DID cannot be accurately diagnosed, pointing to internal consistency between different structured dissociative disorder interviews (including the Dissociative Experiences Scale, Dissociative Disorders Interview Schedule and Structured Clinical Interview for Dissociative Disorders)  that are in the internal validity range of widely accepted mental illnesses such as schizophrenia and major depressive disorder. In Ross's opinion, Piper and Merskey are setting the standard of proof higher than they are for other diagnoses. Ross also asserts that Piper and Merskey have cherry-picked data and not incorporated all relevant scientific literature available, such as independent corroborating evidence of trauma in some patients. Initially DID was infrequently diagnosed, numbering less than 100 by 1944, with only one further case added in the next two decades. In the late 1970s and 80s, the number of cases rose sharply. Accompanying this rise was an increase in the number of alters per case, rising from only the primary and one alter personality, in most cases, to an average of 13 in the mid-1980s. Proponents of the trauma model propose that the increase in incidence and prevalence of DID over time is that the condition was misdiagnosed as other such disorders in the past; another explanation is that an increase in awareness of DID and child sexual abuse has led to earlier, more accurate diagnosis. Those in the Sociocognitive camp explain the increase as a result of iatrogenic procedures and health care professionals past failure to recognize dissociation is now redressed by new training and knowledge and they claim that dissociative phenomena is actually increasing, but this rise only represents a new form of an old and protean entity: "hysteria". In a 2011 publication, V. Sar postulated other possible causes for the apparent differences in the prevalence of DID, including different preferences in diagnostic instruments, cultural differences in the interpretation of presenting symptoms, differences in mental health care systems and differences in the frequency of overall mental health treatment seeking behavior around the world. 
A new piece of research recently examined a collection of the complaints against DID, that clients diagnosed with DID exhibit fantasy proneness, suggestibility, suggestion, and role-playing tendencies. One of the researchers, Ellert Nijenhuis, is a leader is in the understanding of structural dissociation. The research was published in the open access journal (freely available online), PLoS ONE:
Fact or Factitious? A Psychobiological Study of Authentic and Simulated Dissociative Identity States
BackgroundDissociative identity disorder (DID) is a disputed psychiatric disorder. Research findings and clinical observations suggest that DID involves an authentic mental disorder related to factors such as traumatization and disrupted attachment. A competing view indicates that DID is due to fantasy proneness, suggestibility, suggestion, and role-playing. Here we examine whether dissociative identity state-dependent psychobiological features in DID can be induced in high or low fantasy prone individuals by instructed and motivated role-playing, and suggestion.
Methodology/Principal FindingsDID patients, high fantasy prone and low fantasy prone controls were studied in two different types of identity states (neutral and trauma-related) in an autobiographical memory script-driven (neutral or trauma-related) imagery paradigm. The controls were instructed to enact the two DID identity states. Twenty-nine subjects participated in the study: 11 patients with DID, 10 high fantasy prone DID simulating controls, and 8 low fantasy prone DID simulating controls. Autonomic and subjective reactions were obtained. Differences in psychophysiological and neural activation patterns were found between the DID patients and both high and low fantasy prone controls. That is, the identity states in DID were not convincingly enacted by DID simulating controls. Thus, important differences regarding regional cerebral bloodflow and psychophysiological responses for different types of identity states in patients with DID were upheld after controlling for DID simulation.
Conclusions/SignificanceThe findings are at odds with the idea that differences among different types of dissociative identity states in DID can be explained by high fantasy proneness, motivated role-enactment, and suggestion. They indicate that DID does not have a sociocultural (e.g., iatrogenic) origin.
Simone Reinders AAT, Willemsen ATM, Vos HPJ, den Boer JA, Nijenhuis ERS. (2012). Fact or Factitious? A Psychobiological Study of Authentic and Simulated Dissociative Identity States. PLoS ONE, 7(6): e39279. doi:10.1371/journal.pone.0039279
The most recent studies suggest that DID is a form of structural dissociation, as defined by Steele, van der Hart, and Nijenhuis. Again, Wikipedia offers a brief and coherent overview of the structural model:
This model fits the findings of the Internal Family Systems model of therapy (which is not exclusive to DID, but works with all forms of multiplicity). The ANP are termed managers in the IFS model, while the EP are called exiles. The IFS model also recognizes a third group of parts that fall between the ANP and EP distinctions - firefighters are parts that leap into action when the ANP fail to keep the EP suppressed, and they often take the form of addictive and numbing behaviors.
Structural Dissociation ModelSteele, K., van der Hart, O., Nijenhuis, E. suggest a distinction between "apparently normal parts" (ANP) and "emotional parts". ANP, the part in executive control and who is responsible for daily functioning is often exhausted and depressed. The part avoids trauma memory and often has amnesia for many if not all childhood traumatic events. If those events were grouped close together, entire blocks of early life will be absent from ANP's memory. ANP avoids the affect and information held by EP, including nightmares, dreams, somnambulism, intrusive thoughts, flashbacks and some somatoform symptoms. ANP is not only avoidant of the list above, but is actually phobic of trauma memory, related emotions, cognitions and sensory memory that goes with it. ANP actively or passively suppress triggers to the point that it can become automatic. 
"Emotional parts" (EP) are needed for survival situations involving Fight or Flight, total submission, reflexes, vivid traumatic memories and strong, painful emotions. EP remains fixated in traumatic experiences, which it often reenacts. It is focused on a narrow range of cues that were relevant to the trauma. “Action systems” direct EP. 
- PSD - Involves one EP and one ANP such as found in simple acute stress disorder and PTSD. The ANP is detached and numb, characterized by partial or complete amnesia of the trauma. EP is usually limited in scope compared to ANP and is hyper-amnesic and re-experiences trauma.
- Secondary Structural Dissociation. (SSD) - Includes trauma based DDNOS-1, complex PTSD and borderline personality disorder. This is characterized by dividedness of two or more defensive subsystems. For example, there may be different EP's who are devoted to flight, fight, freeze, total submission and so on.
- Tertiary Structural Dissociation (TSD) - This is Dissociative Identity Disorder. Two or more ANP perform aspects of daily living, such as work, child-rearing. There must also be 2 or more EP.
Colin Ross explains DID through his trauma model of dissociation (see Epidemiology of Multiple Personality Disorder and Dissociation, which is unfortunately behind a pay wall). A recent study, published in JAMA's Archive of General Psychiatry, was able to verify the existence of a dissociative subtype in PTSD survivors - the results seem to confirm the links between early trauma, PTSD, and dissociative disorders for some individuals (overwhelmingly, it seems, in those who suffered childhood abuse).