A lot of big companies use open-plan offices, which, IMO, are not great for team development. I personally prefer smaller squared off sections of office for the team. I find this focuses background chat and encourages communication far better than a team spread thinly around an open-place office.
What do you find works/doesn't work?
When jobs are posted on SO, I believe the poster has to indicate how they rate on the Joel on Software test, which is a pretty good measure of an effective (and happy) team. If you've ever worked at a place that can't even answer yes to three of these questions, you'll agree that a team that is ineffective by this definition is also unhappy.