@Thomas Owens: (re source control) Yes, but that's not source control in the same sense that I can check in a .cs file (or .cpp file or whatever) and go and pick out any revision I want. To do that with database code requires a potentially-significant amount of effort to either retrieve the procedure from the database and transfer it to somewhere in the source tree, or to do a database backup every time a minor change is made. In either case (and regardless of the amount of effort), it's not intuitive; and for many shops, it's not a good enough solution either. There is also the potential here for developers who may not be as studious at that as others to forget to retrieve and check in a revision. It's technically possible to put ANYTHING in source control; the disconnect here is what I would take issue with.
(re debuggable) Fair enough, though that doesn't provide much integration with the rest of the application (where the majority of the code could live). That may or may not be important.