I tried the following:

var onoff : boolean;
var testObject : GameObject;

function Update () {
    if (onoff == true)
        testObject.active = true;
    if (onoff == false)
        testObject.active = false;
}

The script works fine when attached to something like the First Person Controller. As testObject I used a sphere. When I attach the script to the same object which I want to disable, I got a small problem.. That is, if you disable the gameObject to which your script is attached, the script won't get called anymore and your re-enabling your onoff variable won't have any effect. Hope that makes sense.

One option I could think of is to parent your objects to an empty game object, attach the script there and simply disable the child. That should do the trick, but there might be more elegant solutions out there.

/edit

Another option would be suitable if you only want the objects to either be rendered or not rendered. You could enable/disable the renderer like this http://unity3d.com/support/documentation/ScriptReference/Renderer-enabled.html

I assume you mean the gameobject won't re-enable when you set the script's onoff variable to true in the editor, and that when you referenced "toggle" in your Update function, you really meant to reference onoff.

I think what you are running in to is that when you set gameObject.active = false, Update() no longer gets called every frame, therefore your code to set gameObject.active = true will never run.

If you have a reference to your script object to set the onoff variable (script.onoff = true), could you just access the gameObject directly from there? (script.gameObject.active = true)

I had this same issue with a guiTexture since you cannot use the renderer property... my easy fix was to make my GUITexture object a child of an empty game object. So the hierarchy was gui_textureUpdated > gui_texture. I attached my script to the empty game object (gui_textureUpdated) that looked something like this...

var isTextureVisible : boolean;
var someTexture : GUITexture;

function Update()
{
    if(isTextureVisible)
        someTexture.gameObject.active = true;
    else
        someTexture.gameObject.active = false;
}

If you are using anything else that does use the renderer property, just use gameObject.enabled instead of .active. This should fix your visibility issues. Hope this helped :)

Remember that .active is deprecated now, and you need to use .enable instead.

GameObject.active is Obsolete in Unity 4, Rather Use: gameObject.SetActive (false); Or GameObject.activeSelf, GameObject.activeInHierarchy