I've set up networks where the server infrastructure itself is on its own segment, so there's no need for firewalls between the servers themselves, but the whole subnet is firewalled by a border router.
A lot depends on how tightly you can lock down a server. On my *nix boxes, I tend to only run daemons with listening ports to the extent absolutely necessary. I have a LAMP server that basically has ports 22, 80 and 443 open, and everything else either shut down or set to listen only on 127.0.0.1. Do I really need to configure iptables?