I've also asked this question in a blog post, but I'm keen for any discussion on this subject - whether it be in this thread or in the blog post.  What do you consider to be best practice in this area?
I currently work as a business analyst for the technology division of a New Zealand financial organisation which employs ~11000 staff (~450 in IT).  We’ve recently created a business analyst community within IT to help with collaboration, knowledge-sharing, and the breaking down of barriers between process and organisational silos.  As a part of this, we’re attempting to understand exactly what the role of a business analyst is within technology and what their interaction is (or should be) with our business customers.

Our model is for the business analyst seems to be mostly one where business requirements are supplied by subject matter experts or project teams from the business, and we take it forward through the rest of the software development lifecycle.  The issue we’re encountering with this model is that we either get very sketchy business requirements provided where we end up doing extra work to fix up what has been provided, or the business has leapt into “solution mode” and attempted to design their end-solution.  In the end, we basically have a disconnect between the project management methodology used by the business, and the SDLCs used by IT.

Those of us who have had more formal training (e.g. tertiary study, etc.) feel that the business analyst is meant to be engaged early in the project and conducts the full analysis work from elicitation of the business requirements onwards until implementation.  This is reinforced by the IIBA’s Business Analysis Body of Knowledge.

What I’m after is an idea of how other organisations use their business analysts and how they interact with their business customers.  We can then use this knowledge to help drive our community forward to a place where we can optimise the technology experience for our business customers.  To this end, could you please let me know how it works for your current organisation or whichever places you’ve previously worked?