I find myself to be smarter and more capable of difficult design work when people nearby shut up and let me concentrate. How would two people constantly distracting each other always add up to one smart person?
I've seen pair teams working correctly, though. Each of them bounces ideas off the other one, and they progress faster than either would've alone. It's like racing two algorithms against each other, each searching a different part of the problem space, and using the first result that's returned. It lets them move on to the next problem quicker.
I don't usually do that very well, but I can't deny that if you've got the right pair of developers, it's a very powerful technique.