I'm a big fan of bull pen type environments, where it's wide open spaces and everyone is together with no walls between.
If you have that, and also offer a few "quiet rooms" where you can go if things are loud or you need to check your personal email, I don't see what the problem is.
Visual and audio noise.
They're really bad for productivity of creators. They're good for managers / coordinators / investors.
The standard argument that "you can wear headphones" doesn't work for serious design work. Pounding music is great for grinding through list-ish stuff, but not for creativity.
It's like sleep deprivation. People who are sleep deprived will insist "I'm fine -- I just need a coffee", but their performance is much lower than those who are well rested.
EDIT> I'm not responding to the over-the-shoulder question here. I find it very distracting to see others' faces, though, e.g. with back-to-back monitors. Most of us are wired to pay attention to faces, so they cause a lot of visual noise.
At this point in my career, open-concept offices with > 4 or so people are a deal breaker. It makes me hate programming.