Basic python question here!, you just get the mxd names, as the if statement is never satisfied.
To resolve, try changing your code as follows, then you should be able to work out what has happened!
import arcpy
from arcpy import env
env.workspace = r"D:\PROJECTS\ab\gis"
counter = 0
for mxdname in arcpy.ListFiles("*.mxd"):
print mxdname
oldText = 'land use'
oldText = oldText + '\n'
oldText = oldText + 'fuel'
mxd = arcpy.mapping.MapDocument(r"D:\PROJECTS\ab\gis\\" + mxdname)
myString = 'free fuel'
myString = myString + '\n'
myString = myString + 'gas'
print "We are looking for a value of: "
print oldText
for elm in arcpy.mapping.ListLayoutElements(mxd, "TEXT_ELEMENT"):
if elm.text == oldText:
print elm.name
elm.text = myString
else:
print "Non Matching Element value of:"
print elm.text
mxd.save()
counter = counter + 1
del mxd