I won't go to the college where the lecturers say that they don't know his/her subject any better than students. I give them money tuition and my time in exchange for them telling me what I don't know. That is why I don't get anything called the new way of (college) teaching method assuming basic premise abovementioned, in which students do lots of group work, and teacher acts at the margin as watchdog, err..., no, facilitator.
The problem lies elsewhere: many teachers fail to make lecture interesting. Putting aside the probability that they don't know the subject well nor catch up with the latest development in the field, you can suspect that it is because: first, they don't acquire the important communication skill. Or, second, they too much rely on, unfortunately, overwhelming textbooks unfriendly to current MTV generation.
Until not so long ago, when Freakonomics hit the market, economics professors (and profession) often fell into these problems. As a result, Econ 101 is no fun for many students, hence is of small use.
So what should teacher do to help students? I don't opt to drastically new teaching method. Just be accessible when speaking to those young minds. Try to read not only academic journals, but also recent (good) pop econ book -and blogs too. As a note, good pop econ books (Freakonomics, Undercover Economist, Discover Your Inner Economist, to name the few) do not contain (stupid) conspiracy theory.
The latest of such book aimed to aspiring Econ 101 teachers is coming from Robert H. Frank, The Economic Naturalist (HT: Justin Wolfers). Here's the appetizer, intro chapter. And if your connection is fast enough, check this funny, and bit corny, MTV Cribs folly of this Cornell's, Ben Bernanke's buddy, Econ professor.