Informal observations are crucial. Often I am able to spot developing problems and deal with them early. Of course, this only works in courses where a large amount of class time is spent in group work, so that I am able to observe them. Formal meetings are useful, especially in cases where a group has developed major problems. However, they do constitute another demand on the students' time, so if finding time to meet is a problem, it can be very hard to get students to show up for such a meeting.
Informal observations tend to be quite accurate.
I believe I have always been successful to the extent that I have a pretty good idea of who is doing what within the group. I certainly find out very quickly if there is a problem. I find that if I move around the room and talk with each group several times a class I get a good sense of what they are doing. I want to stress that my goal in monitoring is to help them understand the material rather than to access their work. With the formal meetings I was able to assess which groups were functioning smoothly and getting the required work done.