Xcode tracks files with an XML "project file." So if you add files in one branch and remove files in another branch, it often puts this project file into a conflicted state. Resolving conflicts in this file is really difficult — lots of confusing paths and SHAs all mixed together. If you don't resolve conflicts correctly, the entire project refuses to open.
Thanks, that makes sense. Is it often that these conflicts arise during development on a team of 1-3 developers? I'm also assuming you're referring to the package contents of the .xproj file (specifically project.pbxproj), correct?