Gameplay programmer Jordan Massey just put up an article on the ArenaNet blog discussing the function of squads, in particular the requirements for, responsibilities of, and tools given to the commander which leads each one. It seems to be a good middle-ground grouping solution between small parties and unorganized mobs. Here's the link.
 

Hmm... Not sure how I feel about squad chat being one way. Otherwise, the system seems relatively well thought out.

ED: I'm not sure, but I don't think he's talked about having parties within squads... does that work? I wonder what that dynamic would be like. I like having the option of chat with the people I'm playing with.

@selfconfessedcynic: I don't think the two are mutually exclusive. I'm pretty sure that it's possible to be in a party and a squad, and you don't have to all be in the same squad to be in a party.

Somewhat related question, has there been official word yet on whether or not /say will be added at some point? I like the one-way communication from squad leaders, it will make organization more effective, but I wish there was a way to communicate between parties that doesn't involve spamming /local.

@isnipeyoudie:@Dark_Lord_Spam:

I'd rather that the party leader selects a squad for the entire party, just as he would select what outpost to teleport to or when to start a mission. I don't think having a 5 man party with 4 in one squad and 1 in another would make much sense, unless you're ONLY doing it for the party chat.

Either way, Jordan doesn't appear to go into it here - he's probably clarified somewhere on a forums but I cbf'd looking. Will see once we get into our first betas.

@Dark_Lord_Spam:

Hm... point taken.

But then, if we're talking about that level of coordination, I'd assume the people involved would have Vent/Mumble. Voice is by far and away more effective than chat, and in general I only really use chat in very PUG-like circumstances. I'd also bet that that is the norm for the people we're talking about. Heck, I had situations in good old Alliance Battles where the leaders were on Skype together whilst simultaneously being in team speak with the entire group. Needless to say, we wrecked fools.

No, when it comes to everyday-PvP, I am happy saying that limiting 5 man parties to a single squad would be beneficial.

@Dark_Lord_Spam said:

@ElSantos: Am I right in thinking that /say is a direct, player-to-player communication? If so, GW1 had a whisper system that is returning in GW2.

I mean /say as it is implemented in WoW - a public chat visible to all characters within a certain range (proximity based). /local is the chat for the whole zone, but when you want to communicate just to the people located at your current dynamic event or whatnot, there's no short-range chat channel. When I'm working with 10 random people at a DE, I don't want to spam /local talking about the DE, and I may not want to send a whisper to one person in particular - I may want to address the people within range of me. I understand why GW1 didn't have that, but it's strange to not see it in an open world game like GW2.