Pairing students up can help to improve learning outcomes, result in better peer relationships and motivate students. This is especially true when students at different levels work together. By pairing up students at different levels both the more able and less able improve. When the more able student assists the less able student, he/she becomes even more of an expert and really masters the material. The less able student also benefits from the personalised attention, enabling them to more fully engage with the material. Both students also display higher levels of motivation, improved peer relationships, and better social and personal development. Teachers can even swap the roles of the students, helping the tutor student to extend their own learning. (From an article by the National Education Association which can be found at http://www.nea.org/tools/35542.htm).
In my own schooling, I've seen this work very effectively with 'reading buddies'. When I was in grade 4 and 5, we were paired with students in grade 1 and 2. We would become their reading buddy, reading stories with them and helping the younger students to improve their abilities. For me personally, I never had trouble reading and in fact loved (and still love) reading all the time. However, I did have trouble relating to my peers socially and I loved the chance to share my love of reading with other learners. It also helped me to gain confidence in myself and my abilities. I also got to see the younger students improving quickly in their skills. By pairing them up, each student got a level of attention that they wouldn't have received in a class with 25 students and one teacher.
When I got older I began helping my classmates in math class. In grade 6 we had to take an assessment to determine our ability levels. Apparently I did well enough that they put me in a math class with grade 8 students. Many of these grade 8 students were struggling much more than I did, and I ended up assisting several of them. Again, as a student who's strengths were in math and science and who's weaknesses were in social relationships, this benefited me tremendously and gave me a confidence level I had never had previously. My classmates enjoyed having me in class (I think) and were able to improve their maths while also helping me to come out of my shell. I also strengthened my own skills at the same time and truly mastered the material by helping others. This mutually beneficial relationship was extremely important to me at a very sensitive age.
Because I teach such small groups and for shorter, more intensive periods of time, I don't often get the chance to pair up learners in our lessons. However, I truly encourage students to meet outside of class and work together to help each other improve their marks and abilities. Although there may be a benefit in a student working on their own and being able to fully concentrate, I also believe that group study (or studying in pairs) has its place in many students' education.