As a developer, I'm not so sure that I buy this. I mean, I get it, developers are going to know how to deal with the bugs much quicker than a customer would. But does it scale well? If I was constantly interrupted by a loudly ringing code I can assure you that my code is going to be a poorer quality than if I had been able to work on it undistracted. So distractions lead to bad code leads to more distractions... that could be a really vicious cycle.

As someone else pointed out, you have to judge the process by its fruits. It looks like it's working for them, but it would drive me crazy.