I have to agree with both of you to a certain extent. In my humble opinion, and in my experience, Social Engineering is a part of hacking. It is not technical, it is lying, and it is manipulation - but still a part of hacking (or in my case intrusion testing).
When I perform penetration tests, many times part of that test is social engineering efforts, and taking advantage of the natural human instinct to trust. This tests the "intagable" aspects of corporate and organizational security, such as policy and procedures.
If I can gain access to your systems by performing a buffer overflow to a listening service, or simply call someone and get a password - I am still in your system, and your system has been compromised. The difference is what is the remedy to this compromise.
In summary - Social Engineering, is hacking (in a holistic sense when viewing security not just through technology, but the whole life cycle) and it is lying / manipulating.