On one project we started in a large, but private room. Each programmer staked out their own space. Might as well have been separate offices. About 8 weeks into the project, we rearranged the desks into a circle, facing out. Relevant communication increased massively. I was aware of exactly what my colleagues were working on all the time (yet still able to focus on my own tasks). Yes, there were times when someone would interrupt me when I had a complex problem gelling in my mind, but it was offset by having the required expertise for the entire product immediately available.