We got over this by creating a standardized Virtual Machine for each team member to work on. The VM is running a Turnkey Linux LAMP install, with Samba. This means we all have an identical development environment, which has been the biggest benefit.
The devs map a network drive (on Windows) to the VM and this becomes their main working directory for a project, and where they commit from. We then merge and commit from the main SVN server to staging/live as usual.
Each developer points his hosts file to the local VM IP using the hostname dev, so that everyone uses exactly the same URL locally (http://dev/project).
Each project can have it's own VM if a specific server environment is required, or multiple similar projects can be on the same VM if the requirements are vanilla. We can match the VM environment to staging/server so that we know we have version parity (particularly useful for PHP).
If any of the devs mess up their local VM, they can just start with a fresh copy and checkout the whole project from SVN, so getting new developers up and running is very fast.
Occasionally the local Samba network has some speed issues, but these are fairly minor. Probably far less than what might occur over a physical network.
Seems to be working well here.
Daniel
