When I first started working at home, I missed having co-workers. I missed dressing up for work although I admit I liked not having to commute for work. In terms of productivity, I really needed to discipline myself. I have a child at home so my productivity was definitely affected in the first few weeks.
I agree that telecommuting is a great option but I don't think it's something that should be implemented for all. Some groups of people need to be in the same physical space to work. Some are more productive working alone at home.