Dealing with problem students

One of my courses this semester has a significant amount of group work. This group work is mostly done in class. I try to let students sort out personality problems and group conflicts themselves. I generally only intervene if someone becomes a true disruption.

Is this the best approach? If you have someone in your lecture class that clearly annoys the rest of the class, do you step in? For group work, do you expect students to sort out issues themselves? Does it matter if we are talking about upperclassmen vs. freshmen?