Pros:
Flexibility- There is a lot of flexibility when running a home based business. If you need a day off for a significant event, or because you are sick, you can take one. If you sleep in, you can just work later. If you want a day off midweek rather than on the weekend, that is possible, etc. You can often wear pajamas to work, or adjust your schedule around things like your television shows. Home based businesses do offer flexibility you do not find in a traditional office or business.
Low overhead- Home based businesses offer you greater market potential because you can keep overhead low, which leads to the ability to offer lower, or more competitive prices. It also means greater profit margins. This is a great thing, as you eliminate many expenses such as rent.
No commute- Another big benefit of a home based business is the lack of commute. It results in you being able to spend more time with your family, and be more productive with your hours. It results in less wear and tear on your vehicle, and no frustrating rush hour traffic.

Cons:
Often interferes with home life- When you work from home it can be difficult to shut it off and focus on your family. It is easy to slip into work mode, and change the subjects to work, or enlist family to help when you should be spending quality-bonding time together, etc. Sometimes working from home means letting work take over your home.
Time management can become an issue- Many people who work from home take advantage of flexibility and turn it into procrastination and poor time management. Without someone breathing down your neck, and keeping you on task, will you stay on task?
Others take advantage of you- Sometimes people hear the words "home based" and forget all about "business". In other words, they often assume that you are not busy, or have nothing better to do than watch their children, run their errands, or help them out in other ways. It is good to do service, but often people take advantage of those who run home based businesses.