It's not absolutely necessary. It is a very helpful tool in raising young obligates. In the past, pumilio froglets have been raised successfully without a clay substrate, but they do not always do well.
I've always called the problem "Pumilio Four Month Death Syndrome". Shawn refers to the same thing in this thread http://www.dendroboard.com/forum/gen...ates-what.html
as MOODS, it stands for Mysterious Obligate Offspring Disappearance Syndrome.
It's linked to a possible calcium deficiency and a calcium enriched clay substrate can be helpful in preventing this. Particularly if you can also incorporate some UVB lighting into the viv.