[WernherVonTrapp]

To the best of my knowledge (w/o references), the decoys affect both passive and active sonar but, to what extent, is debatable. Submarines would sometimes release bubbles that become trapped in various nooks & crannys in it's hull. DD sonar operators were trained to listen for this. Sub design was geared toward minimizing this as effectively as possible but I don't know how far it got in eliminating it. The bubbles released by decoy cannisters would fool the passive sonar operator into thinking he had located the telltale bubbles of a submersible while the bubbles themselves would assist in diffusing or deflecting the ASDIC.
In essence, it was supposed to make the enemy think you're over here, when you're actually over there.