Rapid development by McConnell has loads of examples of where co-located teams are by far the best solution - And my several decades of experience I woudl also agree.
Thanks. My gut tells me there are advantages for both, but that it's at least somewhat situational.
How do you feel about the fact that the book is quite dated. I mean our ability to be integrated into the team, information and workflow while working remotely has improved by leaps and bounds since 1996. He's referencing a time before, DVCS, team chats (IRC I suppose), shared work boards like Trello/Pivotal, DropBox, Google Docs, Github, screen sharing. The list really goes on and on.