It's very well suited for certain work-related stuff as well. Virtual town hall sessions. Community-based support, especially for services where a lot of new things are happening (so users will want to subscribe to the group and remain informed). Virtual, cross-departmental team spaces. Communities of Practice. I've been involved in setting up Yammer and coaching community managers at my last client, and we've experimented with a great many use cases. Most successful cases were in the category of fast-paced, low threshold, opt-in, geographically spread out communities sharing information of temporary value. The low-threshold aspect is a definite plus in some cases, especially people new to the company find Yammer a lot less scary to contribute to than, say, message boards.
The challenges: you need active community management to keep people engaged, and when I was using it there were little or no curation tools, poor search, poor statistics to help community managers (there was a paid 3rd party option which was ridiculously overpriced), and no way to extract valuable information for storage in longer-term media (Wikis, Sharepoint or whatever)
Yammer can add real business value (in addition to the not to be underestimated value of the watercooler effect, i.e. non-business related groups) but it is not free either; don't expect anything to happen if you just roll out the tool and walk away.