I worked at a company that did that. I think there might still have been a productivity loss. All the engineers and programmers got huge studio monitor headphones to shut out the sound of everyone else working. Because of that we all used instant messaging for most our communication even though we were sitting in the same room. We salvaged our productivity by essentially turning ourselves into telecommuters with a commute.

The sales and customer service roles were trying to schedule their calls to minimize the time when two people would be on the phone at the same time, in order to limit background noise.

I don't think the company could have afforded private offices, but I have a hard time believing all of that energy being put into working around the work environment was less expensive than the cost of some high partitions.