As a rough guess, optimal business value in an enterprise software company probably results from engineers spending 20-40% of their time with users/product managers/other stakeholders and 60-80% of their time actually programming/designing/working with other developers. These numbers are highly imprecise and depend on circumstances, but they're probably in the right order of magnitude.
The issue with private offices is that in my experience many engineers will prefer to spend 95% of their time engineering and just 5% of their time understanding the problem. As a result they build more features but the features are significantly less valuable. 2-3 person offices seems to mitigate that pretty well, while open plan offices seem to go way too far in the other direction.