Short answer - They BOTH matter...but for different reasons. So, depending on your goals, here's the long answer...
Food matters more for losing weight. You can workout for hours and hours and not undo a bad diet. Most 1 hour workouts will burn 400-600 calories. That's one donut! So, for losing weight you must make healthy food choices and limit your total caloric intake. Wait - don't leave!!! I'm not saying "Never eat a donut". I'm not about deprivation or starving so - Yes, please do eat that donut if you really want it. Just try to keep your "donut" meals to less than 20% of your overall meal plan and you will be fine. If you are new to healthy eating and need help check out The Healthy Eating Newbies Corner. If you already know what you should be eating but need some new recipes and ideas click here. Losing weight may be necessary for you and if that is the case - congratulations... you are in the right place to get started on changing your eating habits. However, losing weight through diet only and not working out will leave you with saggy skin, cellulite, and a "skinny fat" body. So, working out is a necessity. More about this under "Body Composition".
If you want a sleek and toned body you MUST workout. Working out only and not controlling your diet will certainly provide health benefits and build muscle; however, you will never see the muscle because it is covered by a later of fat. Lose your excess pounds by eating right and taking in the appropriate amount of calories per day as explained above under "Losing Weight". Reveal toned muscles by working out. Here's some workouts to get your started. Or, try one of our Challenges.
For overall health you need both healthy eating and exercise. Countless studies have shown that eating right and exercising can help with your heart health, cholesterol levels, anxiety, stress, increased energy levels, and so much more. I won't bore you with the details or with hundreds of links to prove this point to you. You already know through common sense that you need to eat a healthy diet and workout so just go do it!
Please comment below and let me know what you think is more important - food or exercise - and WHY.