Pros
Working from home for a company that goes out of it's way to support you in all endeavors and make sure you're "taken care of" is one of the most rewarding things I've ever experienced. Talented people who really care for one another and the standard of work that they share keep me coming back for more year after year. This is a dream job for me, and even when I wish I were working on something else, I can't bring myself to even look elsewhere because I love the people and the culture so much.
Cons
Services work can wax and wane and sometimes there are ups and downs in the amount of work available, but Lullabot still takes care of us as best they can. Not seeing other co-workers in person can be a problem for some people, and you really have to be self-motivated and self-directed, but this leads to a lot of freedom and respect, both from your peers and management.