Telecommuting is a good idea for all parties, but it takes the right kind of business and the right kind of employee.
Some people need the social aspect of an office environment. They need that back and forth with other people, or the regiment of that office environment to keep them on task. Some can't stay on task when at home, they let their work performance drop because they think it's okay to babysit their kids all day or go shopping instead of working. Or simply can't stay motivated in general. I work with quite a few people who prefer to work in the office.
Personally? I work at home primarily (do have to travel to a site sometimes, and usually spend a day in the office each week). I could not care less about socializing at work. My office is loud and irritating. I get much more work done at home, with much less stress.