Advantages of working from home:

Freedom and flexibility. You can structure your day to suit your personal needs, whether you want to spend time with the kids, you have a volunteer job, or you want to attend a class. You have control over when you do your work.
Tax benefits for home based businesses. Home based businesses are typically blessed with a number of business deductions that would otherwise not be available to you. Check with your local tax office to find out what business expenses you may claim.

Save money. Assuming you're not meeting with customers all day long, you won't have to buy expensive "work clothes" or use the dry cleaners as often. You also save money on telecommuting costs! No more driving to the office everyday.
Lower start-up costs for home based businesses. One huge savings is the fact that you won't have to rent or lease office space! That alone will save you a great deal of money.

Disadvantages of home based work:

Possible conflict between your business and personal lives. Because you're working at home where you have always spent time with your family, it may be difficult for both you and your family to adjust to the fact that you must work while you're at home.

Lack of social contact. Some people dearly love the social interaction of the workplace. When you work from home, you are far more likely to feel cut off from the rest of the world.

Need for self-discipline. It can be difficult to motivate yourself when you're working from home. There are household chores to be done, plenty of distractions (such as the television), and you can be alone for hours. Do you have the self-discipline required to get your work done despite all this?

Pressure. While working from home undoubtedly provides more flexibility, it can also provide a fair bit more stress. Because you work in the same place you live, you may feel obligated to get "a few chores" done while you're working. You can very easily become swamped with responsibilities - some people simply end up trying to do too much.