speaking from experience (used to live right down the block from my office), it's a bit of both.
having basically no commute was amazing. definitely something I miss... I'd punch out at 6 pm and be home by 6:05 pm.
on the other hand, sometimes it felt like I never left work. this was back when I worked at a NOC, and knowing I was so close to the office, I was very high on the on-call list compared to my coworkers who lived 45-60 minutes away. there's also the annoyance of running into coworkers all the time on your days off just while running errands.