Supposedly, editors don't like critique groups, because they "mess up your voice" or something. Well, I like critique groups, or at least good ones. (If yours does mess up your voice-- well, 1) Maybe your voice isn't as great as you hoped, and you should listen to them, or 2) Maybe you should get a better critique group.)
What I like is manuscripts that someone else has already read. They're usually more readable. Manuscripts that have been critiqued seldom come to me all in italics, for example. And critique groups do tend to point out the glaring plot flaw in the first chapter, and probably a lot of typos too. So I actually prefer manuscripts that have been through the critique wringer.
I am in a critique group myself, though I'm not writing much. (It's a great group, and I don't want to drop out and lose my place. :) What I've learned is that crit groups are like marriages-- some are bad and some are good, and you'd really rather be in the good one.
The critique group will be most helpful if you know what you need. For example, I'm an editor. I really don't need much in the way of "late concern assessment," as the writing teachers say. I better be able to edit my own stuff, since I edit the work of others. So I never bring an "almost-final" draft to critique group. My need is much earlier, in the plotting and fleshing out characters part. I don't have much of an imagination (cue all those editor jokes, you know, about how we wouldn't know creative if it bit us :), and have to be prompted to move out of the conventional. My crit groupers are always saying, "You know, it would be more fun if...." when they read my scene outlines.
But others might want help achieving more power in their scenes, or smoothing out the ragged edges of their voice, or discovering when they've drifted out of point of view or forced a character to do something out of character.
I think critique groups are most useful when you know what lack they'll fill in your writing process-- and when you find the group that fills it.
How big should a group be? Again, that's a matter of preference. I hate large group critiques, you know, when you read your scene and 15 people tell you what's wrong with it. That makes me feel very bad. But others love getting many different perspectives. Personally, I go for a 5-7 person group. That's enough that someone always has something to present, and yet it's not so much that you spent 50 hours a week critiquing. But I think it might take some experimenting to find the size and composition that suits you.
I do know this much-- if a group makes you feel bad, if you leave the meeting thinking you should just quit writing, it's not the group for you. Not that groups should be mindlessly supportive, but they should "critique, not criticize"-- pointing out what's good and great as well as what needs work.
In my other life, I tutor in a writing center at a university, and I keep realizing one truth over and over: Few of us can absorb more than 4 suggestions at a sitting. (I don't mean 4 pointing out of misspellings, but 4 separate and distinct suggestions.) So don't be scared if you find yourself shutting down after a few comments. Take notes-- don't protest. Later you can go over your notes and pick out the three or four things you want to work on in your revision.
Some writers don't want critique groups-- they don't want the hassle or don't have the time. That's fine-- in that case, I suggest that you find a friend who is a reader, not a writer, and ask that person to read your proposal IN YOUR PRESENCE, and do a running commentary as she reads, while you take notes.
But yes, I believe in critique groups. The editor shouldn't be the first non-you to see your proposal, and you shouldn't rely on editors to critique your work. First, that is not what we're paid for. Second, the pleasant (I hope :) rejection letter you receive from an editor very often doesn't comment much at all-- the editor isn't going to list all seven things that she didn't like. So editors aren't going to do a useful critique. Third, who wants to get a reputation for submitting less than the best work possible?
Theresa, what do you say? Pro or con crit groups?