Don’t write specs
Scoble mentions advantages to small teams with a link to 37signals blog article about not writing functional specs, but instead a one page story and focus on designing the user interface.
Joel has a similar, no-frills approach to writing Painless Functional Specifications.
I think the discussion should be less of whether or not to write them, but what should go in them. More often than not, I find functional specifications are full of useless, irrelevant information. I think the industry needs to move away from measuring the value of functional specs by how loud the thud is when it hits the desk, but instead using your time wisely and focus on what really matters…like screenshots.
I’ve been playing with 37signals Ta-Da Lists, and I really like their approach to UI design, simple and straightforward.