I spent a day with a Languages department in a north London school a week or so ago working on strategies for a mixed ability classroom.
Although a discussion of the relative merits of mixed ability grouping vs setting was not the principle aim of the day we did start off by thinking about the opportunities and challenges of mixed ability classes. We then went on to spend the bulk of the day considering strategies for differentiation not only for the G & T and SEN pupils, but also for those with different learning styles and intelligences, more information about which can be found in this bibliography I put together for the day.
Our discussion also considered how pupils might be grouped within a mixed ability class, particularly when engaged in a group task; interestingly this topic has come up recently on the TES forum in a thread about differentiation with the case being put both for pupils to be grouped by ability and for mixed ability grouping when working on a group task.
It seems to me that there will be times when one form of grouping will be more appropriate to a particular task than another, and that as long as you have thought through the rationale for adopting one form of grouping over another and can justify it then that ought to be sufficient.