I hated it every time in undergrad. It was simply never done well. Profs in undergrad tend to have a fairly crappy pool of students and in gen ed type classes and they tend to not pay much education to doing a decent job of teaching. It is usually about poorly thought-out ideas about being modern and up-to-date combined with ease of grading. I especially hated the group discussion thing. Typically, except in language classes, it meant "I have three hours to fill, but only prepared an hour lecture. Sit around and chat with your classmates."
Now, when I taught middle school, I once did a group project on the American Revolution. That was pretty cool and got good feedback from the students. Each student was responsible for her own work and only got graded on her own work, but each group had to turn in one completed project. The group's job was to choose designated people for specific roles, like assigning the various components tasks, assembling the component parts into a binder, and keeping me apprised of the group's progress. The students, as it turned out, were more apt to read and learn materials assembled by their own group than materials presented in any other format.
I recently learned that one of my students, who has recently enlisted in the Navy and is planning a career in the military, ascribes her interest in American history and resultant patriotism to the year I taught her in that class. Considering that the school opposes non-religious life choices by the students, I'm pretty proud of her. I think that project may have planted some seeds. Got a lot of kids to pay attention to stuff that they otherwise would have ignored or forgotten.
In law school, profs in lecture classes frequently require students to form "firms" for collaboration on various levels. I've seen that work very, very well, but often it is similar to the undergrad approach--a time-eating, poorly thought-out device.
I've had endless headaches this year from partners in the elderlaw clinic--first a disaffected and annoying partner, and now an over-enthused, over-emotional partner, prone to getting way, way, way too caught up in helping our clients regardless of the strength of their legal claims. It's endlessly frustrating. Kind of like working with a co-worker on a project. I'm pretty sure my clinical experience mirrors common professional experience in that regard.