I work in a small consultancy / contracting place. For a lot of projects I have to write the proposal, attend pre-spec meetings, come up with the costings, get the purchase order, deal with all the 'commercial issues', invoicing etc

Sometimes it's ok, but I would prefer if we had a dedicated person to doing that all the time.

Managers are definitely useful for paperwork and dealing with commercial / political situations :)

In a perfect world, there would be no need for managers. Everyone would come together as a collective, agree on what needed to be done, and then go off and do it. People would always follow through on their commitments, or report issues immediately so that the group could adjust plans. There would also be no need to document and communicate a plan (like the barn-raising scene in Witness, the canonical example). People would understand their role, and how it contributes to the whole, and would always act congruently with the goals of the group.

Of course, we don't live in that perfect world. In the real world, we need managers at various times, to help make the group more effective. So, with respect to the title of your post, yes, managers are necessary. The secondary question that I believe you touch on, "does manager have to be a dedicated role", is more complicated. In the company I work for, many of our employees move in and out of management roles, in addition to their day-to-day project responsibilities. I've seen other organizations that are successful with a similar approach. I think that where the team consists of highly trained professionals, who have the requisite maturity, it is possible to operate with a part-time manager.

I personally enjoy having producers, which in a sense are like product managers. The primary benefit is that producers can deal with the client, whether internal or external. Programming and designing require long blocks of concentration and it's hard to delivery quality products if you're routinely interrupted.

I disagree with the OP that managers "ideally" wouldn't be necessary. It's only the stigma of BAD managers that we dislike. A great manager is a LEADER who inspires and moves everything forward. Without those people we're just a bunch of people working in parallel in a room, hoping it actually connects in some useful way at the end. The person who can draw everyone together for a common purpose and create a synchronous working environment IS the manager (whether you call him that or not).

Let's not confuse the necessary role of a leader with the horrible implementation by so many unqualified and stoopid people.

The benefit of having a manager (whether they be full time or part time) is to have a central figure with vision on where to take the current project.

It is easy to have people that move in and out of management roles for different projects, but each project will benefit from having a single person with the vision to take the project from a collective of individual workers to a deliverable product within an acceptable time frame, of an acceptable scope, at an acceptable performance level and for an acceptable price.

great question, i used to wonder what the heck my development manager was doing all day, then i became him. currently i work in a mid-sized company (150+).

if developers and designers could work out effective processes while maintaining everyone's happiness/career growth, but at the same time pump out good product then yes, you don't need a manager.

perhaps smaller companies are able to make good decisions quickly and don't need to be bound by so many processes, and i imagine happiness is really unimportant to everyone in these types of environments anyway because everyone's already a masochist, but anytime you have multiple divisions with different priorities then you need someone. decision making processes typically become difficult when there are too many involved.