After creating custom post type, URL to custom posts are invalid

So I created a custom post type like

add_action('init', 'create_post_type');

function create_post_type() {
  register_post_type(
    'portfolio', 
    array(
      'labels' => array(
        'name' => 'Portfolio',
        'add_new_item' => 'Add New Portfolio Item',
        'edit_item' => 'Edit Portfolio Item'
      ),
      'public' => true,
      'capability_type' => 'post',
      'supports' => array('title', 'editor', 'thumbnail', 'excerpt'),
      'menu_position' => 5
    )
  );
}

When I add a new custom post (http://localhost/wordpress/portfolio/portfolio-item-3/) and try going to that page, I get a 404. Whats wrong?

UPDATE

This solution works but what does it do and it sounds like its not good to keep flushing my rewrite rules isit?

Add

flush_rewrite_rules();

after you call register_post_type.