I stumbled upon this excellent article at www.stuccoguru.com on why plywood panels need to be spaced...read it at stuccoguru.com
ABSTRACT-Plywood Sheathing
In this article, Mr. Geary's discussion revolves around the virtues and versatilities of plywood, if it is "installed and protected properly." He describes the many uses of plywood, as well as the most common problems encountered with its installation: the failure to space panels correctly, which often leads to expansion problems, as well as the related problem of covering plywood, trapping moisture with it, which puts it under unnecessary stress. He offers some solutions to these problems and also gives some tips on choosing plywood, as well as basic installation tips and specific notes about good nail and building paper types to use.

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