Distributed teams can work. There are several examples of this in the open source world.
Sometimes, they are just really annoying.
Like right now, when the senior developer is a 3hr time difference away, which makes having strategic meetings somewhat difficult - especially when they have to be rescheduled to later in the day. Were this other person in the office, we could all just go down to the pub and have this meeting, despite the office boardroom being occupied.
Oh well. Could be worse. Actually, next week, it will be. I'll be in Hobart, most of the office is in Brisbane, and our senior developer will still be in NZ.
It's mostly the time differences that make things awkward. For instance, I can spend an hour searching for the answer to a question that the guy for whom it is 8pm could have answered in 30 seconds flat.
The physical separation also ensures that there is not watercooler chat - meetings have to be organised, days or weeks in advance, to make sure that two-way communication is possible. Impromptu discussions about code or process issues simply can't happen, between the remote and local members of the team.
There are some benefits - flexibility in workplace hours and location is nice. But it does come at a cost.