When I was just starting out as a team lead, I remember bemoaning to myself how I wasn't being 'appreciated' enough to have my own office. For geeks like it is can often feel like a status symbol.
But the more time goes by, the more I would rather sit in the same room with the team.

Here are some reasons why, if given a choice to have my own office or have a space with my team, I'd choose to sit with the team:

Be in the loop.

If you're in your own office, you're out of the loop. You're not hearing the rustle and bustle of things being done (or not done). You're not sensing happiness, or frustration, or lack of interest in all things to do with your project from your team. You're just not there to absorb what life is really like being in your team.

Lead by example

If you're in your own office, you can't lead by example as effectively as you can sitting right next to your team. If you're (mostly) always at your team's room, they can see how you act in various situations - from talking with the marketing folks who come by asking for features, to solving time-scheduling problems, to talking on the phone with people (when that conversation can be made in the team room), to managing your own work environment.
Act they way you'd like to see them act in these situations. Lead by example. If you keep your cool on tough technical problems, or dilemmas, or if you lose your temper - people will learn how it's OK or not ok to act in these situations.

Handle things before they happen

If you're right next to the team, and you notice something that, based on your experience, will have important effects that need to be handled (choosing a bad technical route to solve a problem, inability to decide on something, people taking on too many tasks they can't handle..) , you can have a chance to deal with this before something has been 'committed to paper'. you can help either change the course of a decision before it becomes fact. How you act will depend on which team stage your team is in, of course, but regardless of stage, earlier is better, even if you intend to do nothing but shutup and watch people learn something the hard way.

What about 'me' time?

When I suggest this to leaders, they tell me:

• "but I need some privacy, some 'me' time"
  
  Well, now you know how some of your team members feel. If you can solve that 'me' time problem for yourself without having your own office all the time, you might solve that problem for your team as well - for example you can have a couple of empty meeting rooms with machines or phones where people can spend some time alone or talking 1 on 1.
  
  
• "where will I hold me private meetings?"
  In those usually-empty couple of meeting rooms we just discussed.