If this were even close to true (and it seems like one of those tabloid source type things), Apple would probably build a design bureau in the UK and setup a lot of telepresence equipment. Ive is a tad bit too valuable to lose at this junction over something as minor as geography.
J Ive manages and coaches a team of industrial designers and their collaboration with engineers. You cant be very effective, no matter how good you are, when you are on the other side of the world - someone would surely step up and take his place.
Also, Jobs has shaped Apple culture to put crucial importance on industrial design and is very hands on with the decisions. This influence coming from the top, serves Apple well no matter who is the VP of iD is... as long as Steve is around.
I disagree with your assertion that you can't be very effective if you're not co-located. 37 Signals (for one) proves this wrong daily. I agree that co-location is preferable, but if you divide the work in a sane fashion, and you work with excellent people, geographically distributed teams aren't a showstopper. This would be true x20 for Ives.
In recent years, it seems like even mainstream newspapers with decent editorial review have a tabloid-like mania with Apple. I don't know why, but it seems like Beetles or Lewis & Martin type hysteria affects the newsroom.
I didn't pay for access, but the linked article points to a URL for The Sunday Times. Last I checked this is a sister publication to The Times. Not sure how the editorial standards compare.
It's been a year or two since I've read the Sunday Times (it's so huge I ended up spending a week reading it) but my experience with it has been very good, just as good if not better than the daily edition.
