Since this thread is the main one covering this topic on this forum, I thought I'd add the other sources that feed into the "Area Attack" and "Firing into Melee" discussion points.
Order 66 podcast, episode 166, at approximately 22:40 in the podcast, GM Chris talks for about 3 minutes on the topic. He rules that 'area' attacks are different than individual attacks. He never applied a -5 for someone in melee. But he acknowledges the intense debate on the topic, but ultimately ruled against the extra complexity adjudicating the -5 individually during the attacks.
Here is the original d20radio thread that goes on for at LONG time:
http://www.d20radio.com/forums/viewtopic.php?f=3&t=11143Ultimately, we are following SteveO's take on this, but it _IS_ more complicated to adjudicate than how GM Chris ruled in Order66. I agree with those who say it's best to take the temperature of the party they're playing with.