>They are the best and only method I know about to have groups of people solve complex problems creatively
A vast number of open source projects, including Linux, are created by very distributed groups of people. I would find it hard to argue that none of those projects involve solving complex problems creatively.
Note that by solving complex problems creatively, I mean business problems. Not technology. We don't need a co-located team to figure out that a bubble sort is the wrong tool for this job. We need a co-located team to figure out that we're headed down the wrong road and that 3 months of coding might be replaced with two system calls. That kind of conversation can be extremely uncomfortable or impossible to make happen with ten folks meeting over a IM link twice a day.
But that's not what it's about. Not even close. (Yes, to some micromanagers, that is what it means. But if your job sucks because your manager is an asshole, it's going to suck whether you're at home or at work)
I hate co-located teams. The problem is that they work. They are the best and only method I know about to have groups of people solve complex problems creatively. If your problem isn't complex or need a creative solution? Don't use them. But the more rote and simplistic the work you're doing, the more you're going to be replaced by robots. So there's that.
I get the fact that folks hate it. Like I said, I hate it also. But that doesn't change the fact that I've seen it work -- over and over again. I've also seen it horribly abused and misunderstood, but I can't help that. Under the appropriate circumstances, it's the best thing we have going right now.