[BobWarfield]

A lot of the foundation of Agile is improving communication. Communication works better face to face. Whether there are mitigating factors such as not being able to get really awesome people to participate is another question, but I've no doubt that my #1 problem with developers is how to facilitate their communication.

You can only get so many people to communicate well on a team anyway. 10 at most and you're into the Mythical Man Month. That being the case, you find the 10 best people who have good chemistry together, that's job #1. Job #2 is to colocate them if you can, but let's say it is a less significant digit than Job #1.

BTW, developers also need to be able to concentrate. That's another thing that fights with the communication imperative. I'm all in favor of at least 2 of the 5 week days being work at home days.