Another middle ground is where everyone has an office with a door that closes but there are 2-3 engineers in that office. Back in the day when AT&T Bell Labs was the coolest thing ever, that was the system they had and the best companies I've worked for replicated it as well.
Yeah, I've worked a handful of places that have done that.
It only failed me when I was working at a place where my office mates where on different projects, so all of their interaction was just noise to me, and all of my interactions was just noise to them.
I find it works well if the 1-2 other people working in the same space are working on the same thing, ideally as a cross-functional team, (i.e. don't have an office full of "UX" people down the hall from an office full of "DB People")
