that's wrong!! yeah you need to defend but don't give up all that money and territory. the key to defending Russia is simple: layers of defense. have a defense line at the boarder and each territory line after that. i.e. Novgorod, Belarus, pripet marshes, western Ukraine, Ukraine. just build inf. and a few tanks. make the Germans pay for each bit of ground they take. but its most important that you don't let them destroy your whole army. what i mean is don't bunch up your forces at one defense line. do some small counter attacks.
also don't give up Leningrad or Stalingrad with out a major fight. if you do the Germans get a minor factory. the same goes with the Ukraine.
This tends to work quite well for me, as long as i don't leave stacks within reach of germanys tank stacks. I've found it's a rare day that germany can keep the supply lines constant on it's march to Russia. I can usually chop them up at some point or another.