When I say ``teams of two students'', I don't mean ``you write the first half of the assignment, and I'll write the second half''; I want both students working together on all of the assignment, using the techniques of Pair Programming: two people using one workstation, with one typing and the other ``looking over the first one's shoulder''. If you haven't encountered this approach before, I'll point you to a good article about it.
It's hard to define what constitutes ``cheating'' in this sort of course. Students are encouraged to help one another with mechanical and linguistic difficulties (``how do I save this file?'', ``how do you declare a static instance variable?'', etc.), regardless of whether they're on the same team, but designing, coding, testing, and debugging should be done by team members. It's remarkably easy for a professor to notice when three different teams have turned in nearly-identical programs; if that happens, I'll grade it once and divide the credit among the three, so the best any of them can hope for is 33%. Ask the students who took my class last semester about this.
All work on the final exam must be entirely the work of the one person whose name is at the top of the page. If I have evidence that one student copied from another on an exam, both students will be penalized; see above.