Over at the Atlantic, Derek Thompson gives us a short philosophical history of personal music and explains how working with headphones hurts our productivity (via SlashDot):

To visit a modern office place is to walk into a room with a dozen songs playing simultaneously but to hear none of them. Up to half of younger workers listen to music on their headphones, and the vast majority thinks it makes us better at our jobs. In survey after survey, we report with confidence that music makes us happier, better at concentrating, and more productive.

Science says we’re full of it. Listening to music hurts our ability to recall other stimuli, and any pop song — loud or soft — reduces overall performance for both extraverts and introverts. A Taiwanese study linked music with lyrics to lower scores on concentration tests for college students, and other research have shown music with words scrambles our brains’ verbal-processing skills. “As silence had the best overall performance it would still be advisable that people work in silence,” one report dryly concluded.

From my experience, he’s absolutely right – at least as it pertains to any work involving critical or creative thinking.
On the opposite side of the spectrum, I find it helpful to have music or a podcast on when I’m doing any sort of production-level work. This kind of work doesn’t require heavy mental lifting.