This post on Scala-lang talks about research done on how the style of language affects productivity (the time it takes to understand other peoples' code). It is specifically comparing Java with Scala. Here is the paper that the post refers to.
Scala allows functional programming, as in Scheme, as opposed to procedural or object-oriented programming, as in Java, but Scala allows a nice blend of the two, which is a unique approach among programming languages. Yes, there was LOOPS and CLOS, but Scala's approach is quite different and I think it's much a more integrated one. There seem to be more and more posts out there about the importance of functional languages. Personally, I agree with the premise: that functional techniques lead to denser code and that can be (if used properly) easier to understand and maintain. Actually, this is related to one thing that I emphatically agree with the eXtreme Programming camp on: don't use accessors unless absolutely necessary (i.e. use refactoring to insert them when you have need of them).
There is a controversy here, though. Every now and then, over the years, I get extreme push-back on my coding style, because some programmers REALLY hate functional style. They act as if it's offensive -- as if people who use functional techniques are snobs and feel they're too good to use the straightforward, meat-and-potatoes approaches that the gumshoe programmer in the street uses. That's not it at all for me -- I use procedural techniques too. Just not all the time; not as a golden hammer.
It IS possible to use functional techniques in Java (using anonymous inner classes), but they are ugly and verbose. Nevertheless, I use them in places where I feel they're appropriate. Some people have complained bitterly about this in the past. That hasn't had an impact on my code, because of my position and the unique constraints and properties of it but in other circumstances I would be forced to write in what I consider a less effective way.
Maybe this attitude will change with the attention that functional languages are getting. I was a Smalltalk programmer in the 80s and 90s, and I remember the Java hype. A lot of Smalltalkers were saying that it would pass because it was just hype. After all, they said, look how inferior Java is with its primitive types, substandard collection library, and skeletal GUI support, compared to Smalltalk's! And anyway, it was just the new new thing. I figured Java was going to eat Smalltalk's lunch. I made noises so that people at our company got trained in Java and I made a technology that connected Smalltalk to Java so that Smalltalk could essentially use Java as a display medium, which I thought might slow Java's impact on Java (as of last year, there was still at least one Smalltalk project using that technology).
Are functional languages just being hyped now as the latest attempt at a silver bullet or do they REALLY have something to offer? I've always thought they were interesting and powerful and fun to program with. As I mentioned before, the functional paradigm has been around a long, LONG time: Church introduced Lambda Calculus in 1932 and Turing introduced his machine in 1936. They were both VERY different approaches to computing and the Turing Machine approach is currently "in vogue."
That may change. What if functional languages are shown to scale better in several dimensions, such as code comprehension and multithreaded programming? I guess we'll see, but it's starting to smell that way to me. I did a lot of programming in both LISP and Smalltalk, back in the day. When I switched to Java, the lack of lambda in JDK 1.0.X was a real pain. When they introduced inner classes in 1.1, things got better, but so far they really don't have the brevity of Smalltalk's blocks.
Groovy and Scala have nice lambdas and Scala really focuses on functional tools. My money's on a change that integrates functional tools into the JVM. Maybe that'll come quickly as more and more deep pocketed groups adopt Scala. That's how Smalltalk got mainstreamed in the 90s. Even if Scala doesn't get super broad adoption, if high tech, high finance, and infrastructure orgs continue to adopt Scala, there will be a nice little Scala niche for a lot of people I know.