We have a build system that auto-generates our makefiles. One thing it does is recursively descend any subdirectories and build them as libraries, linking them together with the main directory's objects to make the application. (In practice, these "subdirectories" are usually symbolic links.) Libraries are static unless the directory name ends in ".so". One thing that's nice about this is that a full build of our system, which has many executables, doesn't have to repeatedly compile the common libraries.
However, as a result of this, there's no separation of headers and sources. And it has never been a problem. Honestly, I think it's better this way because headers and source files have commonality of location, and you can grab a directory and know you got everything you need to use it. It also works great with Subversion's "externals" feature, and similar features in other VCSs.
One last place where an include/src separation fails is if you use any code generators, such as flex, bison, or gengetopts. Figuring out where these tools should put their outputs so they get built is tricky if you've spread things out.