In my job at westfield.com we’ve been dealing with the challenge of scaling a development team for years and are yet to get it anywhere near optimum.
This is great post on scaling a team from a company that should know all about it – Heroku.

http://adam.heroku.com/past/2011/4/28/scaling_a_development_team/

This is a great way to think about scaling and well worth a read although I think that most of the challenges one will meet scaling a team are not answered by this post – i.e. exactly how and along what lines you break up your teams. It’s interesting to see that the way Heroku broke up their teams was along horizontal layers rather than through functional areas but this probably reflects the highly technical nature of Heroku’s business.

We are currently undertaking a team restructure and I have been convinced for some time that to minimise friction, distraction and duplication, our teams at westfield.com need to be structured based on vertical slices of business functionality; allowing teams to own certain areas and functions of the site and business.

I’ll post again with an update when the teams are restructured and the results are in..