It is correct, but the choice of parameters makes it misleading as to the behaviour of the function. I would do it like this:
ParametricPlot3D[{r*Cos[t], r*Sin[t], (1 - 2 r)*Sin[t]/r^2},
{r, 0, 3}, {t, 0, 2 Pi},
PlotRange -> {3 {-1, 1}, 3 {-1, 1}, 3/2 {-1, 1}},
BoxRatios -> 1]
