I've always advocated standing up more for psychological reasons than anything else, although what Steven said is absolutely true.
I give people two choices: hands on hips or hands on your head. I don't let people put their hands on their knees b/c I think it encourages a defeated attitude. With hands on your knees you are stopped, chest down, taking huge deep breaths. I don't want people to stop in the middle of a workout, I want them to take only enough time to recover and keep going.
Something I've been trying to get people to do lately is to think of it as RECOVERY, not REST. Recover and move forward. Rest means that you are done.