Even when students work on their own independent research projects, groups of two to five students working together can be very productive. Students get stuck less often, and may require less faculty attention, when they can rely on each other for collaborative problem solving and feedback.
Groups are also useful for maintaining continuity. For example, a group that has several sophomores, juniors, and seniors allows for students to participate in the project for several years and for more senior students to help mentor the newer ones.
Whether students work on individual or shared projects, it can help to assign each student distinct responsibilities but also encourage frequent interactions.