One of the tenants of Agile development is the concept of "Sustainable Pace". Let me quote the Agile Manifesto:
"Agile processes promote sustainable development. The sponsors, developers, and users should be able to maintain a constant pace indefinitely."
It turns out that this is just vague enough to leave it open to a wide array of interpretations.
Many, believe that this means instituting the "40 Hour Work Week", where the team limits the amount of work that it will take on so that no one works more than forty hours per week. Personally, I think that this is an ideal that is worth working toward, but is usually unachievable in the real world. Part of "Sustainable Pace" isn't about how much you work, its about the ability to deliver functionality on a regular basis. Forty hours may not be enough time to pull that off.
I have seen several presenters talk about sprinting and resting. I like this approach. Your team would work hard for a few weeks, usually working more than 40 hours in a week, and then have an "off" week. This doesn't mean that they get a vacation once a month. It means that they get a week where they aren't 100% committed to the iteration and can spend time on side projects to break the monotony of it all. Apparently, this works for many teams. I'd think that you would need a lot of management support for this kind of thing, not to mention the personal discipline to come off the iteration. It is important that all employees have the time and backing for personal development. That's the best way for a company to grow in its abilities and increase the value of its employees.