I think it depends on what type of developing you're doing. I find that if I'm working on a complex piece of code that requires a great deal of concentration, then music tends to be a distraction. However, if I'm writing more mundane code (like CRUD stored procedures, etc.) then music doesn't seem to have a negative impact.
I think a lot of parallels can be drawn between this and listening to music while studying. Here's an article for reference. The crux of that article in my opinion is this statement:
Research has shown that, with
practice, people can improve how often
and when to shift focus to other tasks
most efficiently, and they can sharpen
their ability to visually scan between
windows open on a computer screen. But
decades of experiments on adults have
proved that performance suffers when
people try to multi-task.
So my personal opinion is that if you want to be at your very best when writing a complex piece of code, then it's best to remove as many distractions as possible and focus solely on the task at hand. I guess another word for this is "tunnel-vision".
Others may disagree, which is fine and encouraged :).