The biggest upside for me is that you can get lots more done - if I'm in the office then someone can interrupt me physically. If I'm at home, the best they can do is MSN me (I can ignore), they can e-mail (I can ignore) and they can phone me (I can ignore that). If something is not urgent I will leave it for a couple of hours.
I also find these does actually help co-workers learn - if you're in the office and they ask you for help, they get it. If you can't respond right away, it often means they'll spend their time on their own trying to fix the problem and then they don't actually need you and they increase their knowledge.
The other massive upside is travel costs (depending on location of your office to your house). Fortunately my wife works from home a lot as well, so it means we only need 1 car (saves a fortune) and obviously spend far less in petrol. Even though we sit in the same room, we barely speak to each other all day a lot of the time - she is often on conference calls and I am coding, but at least if we want a bit of human interaction, we have it.
We've been doing this for 2+ years and we don't have any problems - I guess some couples might find it a strain but it works really well for us.
The few times a month when I have to drive during rush hour remind me how much better life is when not spent in traffic. And without the daily distractions of office life I get much more accomplished in much less time.
So long as you have good self control, and can work independently and self-motivate, it can be a wonderful arrangement. If you are lacking in those areas, I imagine it can be very difficult.