For me, there’s nothing like being there with the work in front of you and all resources (including personnel) at hand. If I can wrap up a question or touch-base, I don’t mind walking to another person’s office instead of slinging e-mails that won’t be read or leaving phone messages that won’t be listened to until much later. And I’m happy to help someone get their work done if the intrusion only lasts for few moments.
One advantage of working remotely though, is not having people all up in your face, popping in your office when you’re trying to get something done. I would suggest that allowing part of the day to be done offsite, as long as it is well documented, might be very helpful. Long distance work though, I agree, you gotta be seen.