As far as I'm aware the very 'problem' with these crunch times is that the employees are paid no over-time - or paid at all for the extra time they put in due to the nature of their contracts. 

This article snips certain things Pachter says without really explaining his full points. Basically - he did concede that over 3-6 months or so (1 year + rumoured at Team Bondi) crunch time is 'too much' and wrong. However, when you go into this industry, you know you're going to have unpaid crunch time and you know how much you'll be paid.

 He then went on to say about people complaining about not being paid enough / for crunch time. His counter argument was that if the game you're making launches and is a big success then a % of the money it makes go into a 'profit pool' which is then split up amongst the team who make the game. Insomniac games have sent their entire devlopemet team + famlies on holiday after a successful launch before, and the profit pool payments which the Infinity Ward guys are suing Activision over are around $78m... to be split between around 300 employees... So although the crunch time might be unpaid, you could unltimately get a huge pay off if all goes well.

 I'd tend to agree with him for the most part but crunch times should last longer then 'normal' or then promised. It sounds like the Bondi guys went into crunch time 3 months before launch, and then delays of the game meant their crunch times (6 day weeks working 12 hours+) lasted for 18 months or so :/. That's crossing the line, if true.

No, read about the Mythical Man Month as to why.

Essentially, it boils down to one woman can make a baby in nine months but three woman cannot make a baby in three months.  Adding more people does not always get things done quicker because some things depend on others.  You could have 1000 people working on a project but if you only have the bandwidth for 100 people then you have 900 people twiddling their thumbs.

You can hire 300 people and have work being done 24/7 with 3 8 hour shifts 

Not really because adding multiple hands on a single item can (and will) also increase time. 

Really, just read the link.

If they actually paid overtime which I'm pretty sure they are legally obigated in some places, it would be more then the increased time

i'd actually say your post is BS.  performance is always constantly evaluated and putting in a 35-40 hour week when everyone around you is doing more puts you at the bottom of the list of valuable assets or alternatively, at the top of the list of people fired.

You misunderstand what I'm saying-- it might take one person 8 hours to finish one work item.  It's flawed thinking that two people will take four hours because that's ignoring the fact that the two people will work different and there's time involved in transferring the work from one person to the next.

One more time-- read the link.

Piling people onto a project does not always help.