- you are stuck with the same people (whom you may or may not like)
- you get little free time to do your own thing
- if you don't like the guide or don't like the hotel, you're stuck
- you get my drift...
However, a lot can be said about having a guide in certain places. My first trip to China in 1998 involved self-guided exploration with hotel-booked group tours and it was great. So a combination of the two - for me - strikes the perfect balance. Even better, if you can afford it, is to combine self-guidance with private tours for you/your group only.
Combining self-guidance and guided tours maximizes your ability to do what you want. While this option might make your trip slightly more expensive, you get the advantage of having a guide in certain places where you think you might want/need one and also gives you the ability to get around easier if you're planning to see several sights over a day or two (using a guide + vehicle). In the end, it might just work out to be a wash cost-wise, and make your trip more enjoyable.

