As with many things, working from home entails tradeoffs whose [dis]advantages will be weighted differently.
For me, it's great when I need to concentrate and bang out the code. No distractions, and I can poll IMs instead of needing a context switch when someone drops by. If I'm stuck on a problem I'll go for a walk, cook food, or take the laptop out to a coffee shop to work. I enjoy the flexibility.
Downsides for me: I do miss some of the random office chatter -- finding out cool problems coworkers have solved and generally learning by osmosis. And I have yet to find a great replacement for 3-4 people standing at a wall of whiteboards. IMs, skype and meeting highlights solve some problems. Our group is 2/3 remote spanning 8 time zones, so we're used to working a bit harder on communication.
As for social factors, it was hard at first. I'd find myself not leaving the apartment for weeks, which was less than good... I'm making an effort to get out of the house daily, whether hitting the gym, buying groceries, or just strolling around. This is getting easier, especially as spring seems to finally be hitting Boston.
The biggest non-technical advantage for me is not needing a car. I detested commuting. Instead of spending an extra hour or two driving I can take breaks (or even naps) in the day and have the same "door-to-door" time. Financially, it's also a winner. I don't even know how much gas costs here. There are 4 zipcars within a few blocks if I need them.
Work-life separation is trickier. I'd love to have an apartment with an extra room for an office, but that would likely cancel out any vehicle savings. Getting a separate desk to split work and personal computing helped a ton here.