Where temporary congestion cannot be avoided, some buffering in network nodes is required (in routers and other packet-forwarding devices such as Ethernet or MPLS switches) to queue incoming packets until they can be transmitted. The appropriate sizing of these buffers has been a subject of discussion for a long time.
Traditional wisdom recommends that a network node should be able to buffer an end-to-end round-trip time's worth of line-rate traffic, in order to be able to accomodate bursts of TCP traffic. This recommendation is often followed in "core" IP networks. For example, FPC (Flexible PIC Concentrators) on Juniper's M- and T-Series routers contain buffer memory for 200ms (M-series) or 100ms (T-series) at the supported interface bandwidth (cf. Juniper M-Series Datasheet and a posting from 8 May, 2005 by Hannes Gredler to the juniper-nsp mailing list.)
Recent research results suggest that much smaller buffers are sufficient when there is a high degree of multiplexing of TCP streams.
Sergey Gorinsky, A. Kantawala, and J. Turner, ISCC-05, June 2005 Another version was published as Technical Report WUCSE-2004-82, Department of Computer Science and Engineering, Washington University in St. Louis, December 2004.