Not compromising on quality is not only your professional obligation but it is also important for your own joy of work and is critical for the company. (Ken Schwaber)
My take on this is that compromising by skimming on test-dev-refactor loop (by eliminating refactor and/or test) is BAD. But working with the customer and negotiate a delivery of a Fiat 126 rather than an F430 at the end of the current release is something to encourage if resources and time are tight, in the spirit of the pure iterative approach. After all, if the business problem is "I need to drive from home to work", that is a perfectly valid solution to it.
This is what Jeff Patton was talking about at the last XPDay in London when he was talking about sacrificing quality if time/resources are scarce.
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