I quickly browsed [link=http://www.lebanonhealth.com/condi/49903.htm]this page[/link] and didn't find anything specifically referencing cysts on, around, or internal to the penis. It couldn't hurt to check it out, or seek a second opinion from another urologist. We're not attacking you, bud; if your first doctor is telling you the wrong information, then his incompetence could cause some untold grief for you down the line.
Edit: Well, I got curious and searched for "penile cysts" on the Web. After getting a bunch of JELQ-related pages (the fibbers!), the only cysts I heard about were skin-surface ones (e.g. clogged up pores that become "closed off" and form into the cyst on the surface of the penis). And, truth told, [link=http://www.gfmer.ch/Selected_images/Male_external_genitalia_images/penis_benign_macroscopic.htm]this page[/link] shows pictures of some conditions that you should really worry about, not that your cyst thing isn't important. (Warning: Graphic content.)