I think the biggest problems that I've encountered with select team formats is the lack of commitment that the team has to the players on that team. As several posters have noted, the first good player that comes along displaces the one last on the depth charts. Or someone will try to hijack the better players to a more select select team. Not a good scenario for team unity.
Alternatively the "rec" format waters down the quality of players. The unscrupulous coaches, that seem to be more common than I would like, will use the relative lack of skill to further the cause of winning by teaching non-hitting (don't swing; they'll walk you) or pitch only one or two players an entire season. Not a good format for developement.
Rollerman