What you heard is correct. Works earn them an eventual stab at becoming Gods themselves. We've already posted links on this post to official doctrine that says it is so.
http://www.lds.org/library/display/0,4945,11-1-13-59,00.html
When we lived with our Heavenly Father, he explained a plan for our progression. We could become like him, an exalted being. The plan required that we be separated from him and come to earth. This separation was necessary to prove whether we would obey our Father's commandments ....
...If we prove faithful to the Lord, we will live in the highest degree of the celestial kingdom of heaven....
...The Lord has promised, "All things are theirs" (D&C 76:59). These are some of the blessings given to exalted people:
They will live eternally in the presence of Heavenly Father and Jesus Christ (see D&C 76).
They will become gods.
They will have their righteous family members with them and will be able to have spirit children also. These spirit children will have the same relationship to them as we do to our Heavenly Father. They will be an eternal family.
...They will have everything that our Heavenly Father and Jesus Christ have--all power, glory, dominion, and knowledge.
President Joseph Fielding Smith wrote: "The Father has promised through the Son that all that he has shall be given to those who are obedient to his commandments. They shall increase in knowledge, wisdom, and power, going from grace to grace, until the fulness of the perfect day shall burst upon them" (Doctrines of Salvation, 2:36).
One question that I've never seen the answer to...
If a male LDS marries a female LDS who is also the faithful daughter of an LDS, who gets her on his planet: daddy god or hubby god?
If daddy god, then the hubby god loses his eternal wife.
If hubby god, then the daddy god isn't together with his family.
Either way, the "eternal family" must be broken up. I'm confused.