I've been telecommuting for the past two years, for a virtual company, and I hope I never need to give it up.
There are some things I miss, in particular (a) my wife not needing to keep our kids somewhat quiet during school vacations, and (b) having a ready-made social life due to being cooped up with coworkers.
But after working out some of the kinks, and with a just a little extra self-discipline, it's so, so worth it.
Even if an employer needs to pay and $5k/year to cover telecommute-specific costs (such as decent video conference equipment, etc.), it seems it must be a win-win for just about everyone involved. (At least for software development jobs. Not sure about other kinds.)
$5k/year for telecommute costs? Maintaining a VPN and having decent conferencing equipment shouldn't cost that much. And if it does, the savings in office space(have you seen what SV office space costs?) more than makes up for it.