This is a question to see how comfortable you working with other people. It is always best to be honest, with the employer and yourself. If you really don't like working in larger groups or around lots of people then let them know… Maybe the job isn't an exact fit for you and that's OK because there will be many other opportunities out there that may provide you with your ideal work environment. Phone interviews and in person interviews are also a perfect opportunity for you the candidate to be interviewing the employer, to verify if their company/job is best for you!