I'm not sure where I fall on this issue, probably a little on both sides. (Although these discussions always make me thankful for our school district, which has its faults but also tries to do right.)
I do think there's something to be said that teaching someone else skills can truly solidify your own skills. You have to understand something completely and thoroughly to be able to teach it, IMO. So I see the benefit, but not at the cost of not having equal time being taught new skills, which can clearly be the negative side effect of this type of grouping.
I'm happy to say that our principal recently brought up (at a parent forum, no less) the reality that it's the most advanced kids that are making the least progress each year. And that he, and the school district as a whole, are working on fixing that. That the gifted kids shouldn't be short-changed just because they achieve "Advanced" on the tests. We'll see how that plays out, given that our gifted support program is really a pull-out enrichment program with no acceleration piece to it. But, I do think his comments were one of the reasons that the math specialist no longer only works with low-skill kids but also has pull-outs for the high-achieving kids as well.