A recent study (sadly, one you have to pay for to get the full report), suggests that a compact street grid supports greater levels of physical activity and leads to better health outcomes.
Three cheers for 200 foot blocks!
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Perversely, it’s also really inefficient in terms of land: http://www.planetizen.com/node/54477
I’m not surprised about this at all. check http://www.walkscore.com for additional info that will back this up & then some.
Also http://www.designinghealthycommunities.org is another great resource.