Geographic Distribution of Teams

Do I really need my entire team all together and in the same office at the same time?

Obviously, this is the ideal solution. The simplest and most direct forms of communication are possible this way. But even when the entire team is in one office, there are always ample distractions, frustrations, and multiple tasks to think and work upon. Even when teams are in the same office, they don't always work the same hours and some organizations encourage telecommuting on some days. The best solution, the one that is most productive, is not necessarily so simple as getting everyone in the same office.

What does a team require to be at peak production?

What might be "best" is not always the most realistic. Whatever your organization decides upon, teams must be provided the infrastructure to be productive.