Personally, I do find I actually get more done when working at home - there are far more distractions in the office than at home, where I can just steam ahead with what I need to do. And getting the dog out into the countryside for my lunch break makes a nice welcome change and clears my mind better than being stuck in the middle of a boring business park!
Having said that, I prefer being in the office for the simple reason that I like to keep my work and home lives seperate. However, on the odd occassion when I need to work at home, it is good to know that the opportunity is there.
As to Yahoo's decision, it was bad management that has got them into a bad position, looks like they want to start amending that position with another bad management decision!