In normal Software Engineering, generally, the vision document is a document that describes the high level things that the people involved want from the product. For anyone curious, the wiki link here might help to elaborate.
Essentially, every software house has their own take on the process in which software is suppose to be made. Our studio brainstorms for a couple hours or days, and starts writing the general idea in an openoffice writer document. Some rough sketches of what the product will look like at certain screens are included, especially sketches about what the game looks like in the main mode of playing, the options screen, etc.
For example, in our game SimpleMatch, we drew a big box to indicate the playing field, then a bunch of boxes that populate that playing area, wrote some notes off to the side about how each box inside is a different color, and the goal of the game is to simply touch the "tiles" and match colors.
The vision has basically nothing to do with coding, instead it is more focused on what the user sees, and is expected to do. This could be confused with the game design because there should be some overlap. For our studio, we see the vision as what guides the game design. The vision is the paraphrased executive summary, and the game design describes in detail the meat and bones of the game itself.
Like all documentation, it is a live document that can change over time.
Is a vision necessary? No, nothing is necessary to do, however the time involved with "doodling" your ideas in to a tangible and real product is a good first step in to making an actual product, and not just expelling hot air that you "want to make a game". If this document doesn't serve you, don't do one.
Personally, we've found that the vision is a nice way to start the process, but usually we abandon the document once people in the team understand the basic idea of what we're doing, where we're going, and agree with the direction. More importantly, we use the vision as an outline while the game design is being done. Once the design is done being drafted up, the vision usually disappears.
Oh, and do you need a title of the product at this point? No, definitely not, you can keep it called anything you want, as long as people can centrally refer to "the project" in a conducive manner.
For the sake of this series, we will be envisioning a product here. Stay tuned for a vision dump of our new product from our team tomorrow!