Depends on how you look at it. For my money though, none of the arguments proponents use really hold up though.
They say that being able to read the whole file in one sweep improves performance. While true, we're talking about fractions of a second here, all well below the human threshold. Meaning the savings are so small, you'll never notice any given individual one, and they DO NOT stack. A fraction of a second here and a fraction of a second there does NOT mean that over the course of an 8 hour day, you're going to get the same amount of work done in less time. That would assume that humans are machines, and capable of consistent output in terms of both speed and accuracy. So unless you're some kind of advanced prototype android, I don't see that happening.
The second main argument used is that it reduces the wear and tear on the hard drive by making the read/write heads move less often. Which, IMO, is completely destroyed when you factor in all the moving the read/write heads have to do to defragment the drive in the first place. I'd say that argument comes out as a wash at best.
What would actually be useful, is if Microsoft made some fairly simple changes to NTFS, like the Linux developers did with Ext2 and it's offspring. Instead of a simple FIFO system, where the filesystem just looks for the first available block of space, it should look for the first available block of space that is large enough to hold the entire file. Only failing that, split it up into multiple pieces, and of course split it into as few pieces as possible. What you have then, is in effect, a self-defragmenting filesystem. And compared to say the Windows "Genuine" Advantage program, the logic to do what I described is really quite simple. So clearly Microsoft is capable, but it would of course mean the (long overdue) end of all those places that sell degragging tools. They could still peddle their wares to places that have large database servers, where every fraction of a second they can eek out of disk I/O performance might mean an extra 2-3 transactions can happen, but defrag tool makers will no longer enjoy the large pool of people too dumb to know any better like they have for the past several years.