I've always used multiple characters. Part of this stems from having a small number of players (often myself and 2 players playing modified 1st edition) over a period of about 26 years. Part of it also has to do with a number of practical advantages, some specific to our own approach to the game, but suffice to say I and my friends play unusually large parties. The most characters we've ever run in a viable campaign is about 10 (1st edition). Since switching to 3.5 and trying to game with other groups I find players resist multiple characters a lot, so I try to tone it down. Still, I have at least one good convert who is always happy to add another, ...even when I am trying to hold it down for the other players.
I can understand the concern about lack of role playing. Where the problem rears is most critical is when an entire group is discussing a decision and players pick and choose the character that speaks for them. Sometimes a player will for example have a Rogue speak for him while ignoring his Paladin (who would surely object to the very plan his Rogue advocates). This is partially mitigated by assigning leadership rolls to 1 character per player, and they then discuss plans among themselves. Of course the leaders have to make sure their plans are acceptable to all characters, and things get interesting when they fail to do this, but that is a common move in my campaigns. In specific situations which are presented to various segments of a group, the role playing tends to come out just fine. Once a given character from a given player is put in a unique situation (say he is approached by a specific NPC with an interesting proposal), it becomes a kind of miniature game in which the player deals with just one character for a bit. In combat the good players can usually differentiate what each character would do individually, but some players have more trouble than others.
One aspect of the decision probably has to do with what you are trying to play out. Extra characters in a dungeon are often wasted. And extra characters on a mass battle turns it into a wargame (which can be fun from time to time). Most of my campaigns have involved quasi-military operations or siituations in which the group was faced with potential division from time to time. One of the plesures of a milti-character campaign can be the question of wich character is going to be central to any given game. Depending on the tactics of both the players and their enemies, a different character can be put on the hot seat in each game. And part of the challenge becomes making sure that the right characters are in the right places to be effective at any given time.
