Actually, Sarah, doctors -- GP's or Specialists -- are not really a very good source for information on medical research and study data (spoken as the son of an Internist -- I know lots of doctors well).
What Christalyn says above is true -- by the time of diagnosis, all T2's have substantially reduced beta cell function -- this is why they have become symptomatic, i.e. diabetic. Prior to that, they have been living with insulin resistance for years, and their pancreas has been meeting that challenge.
A paper by Guillausseau PJ1, Meas T, Virally M, Laloi-Michelin M, Médeau V, Kevorkian JP. titled, "Abnormalities in insulin secretion in type 2 diabetes mellitus" published in 2008 in the Journal, Diabetes & Metabolism. The abstract:
Type 2 diabetes mellitus is a multifactorial disease, due to decreased glucose peripheral uptake, and increased hepatic glucose production, due to reduced both insulin secretion and insulin sensitivity. Multiple insulin secretory defects are present, including absence of pulsatility, loss of early phase of insulin secretion after glucose, decreased basal and stimulated plasma insulin concentrations, excess in prohormone secretion, and progressive decrease in insulin secretory capacity with time. beta-cell dysfunction is genetically determined and appears early in the course of the disease. The interplay between insulin secretory defect and insulin resistance is now better understood. In subjects with normal beta-cell function, increase in insulin is compensated by an increase in insulin secretion and plasma glucose levels remain normal. In subjects genetically predisposed to type 2 diabetes, failure of beta-cell to compensate leads to a progressive elevation in plasma glucose levels, then to overt diabetes. When permanent hyperglycaemia is present, progressive severe insulin secretory failure with time ensues, due to glucotoxicity and lipotoxicity, and oxidative stress. A marked reduction in beta-cell mass at post-mortem examination of pancreas of patients with type 2 diabetes has been reported, with an increase in beta-cell apoptosis non-compensated by neogenesis.
While it is true that T2's will usually always have some insulin production regardless of how far the disease has progressed, it is not true that they have an otherwise healthy pancreas producing the maximum amount of insulin possible from a healthy organ and it's just insulin resistance that makes it not enough.
The problem is a combination of IR and impairment of the pancreas. Something else you many not be aware of: IR, once someone's a diagnosed diabetic (i.e. it's progressed enough to be symptomatic), IR is pretty stable, and doesn't really get any worse for most T2's as long as they maintain their weight.
The disease continues to progress, however, because the pancreas continues to decline. Many T2s, like T1s, end up needing basal insulin in their later years because their condition is very similar -- little to no insulin production. The paths to get there are different, but the end result is the same.