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Well, sure. What happens to your project when you don't start work on internationalization, for example, until halfway through the project? You're screwed.

"Do you ever feel that sometimes designing up-front makes sense?"

Ugh. Agile already has wreaked havoc.

I don't believe this is a dilemma at all. Since when has "agile" replaced designing an application before writing a line of code? It probably is a bad idea spell out all features (because the client will change them), but you absolutely need an architectural design and you need to be aware of make or break type features. jtheory already mentioned internationalization.