In my line of work (illustration & animation), I think people kind of like the fact that I work from a home studio. I think it puts the business relationship on a more personal level, which I strive for.
I rarely meet with my clients in person and have only had one over to my home studio. He has exactly the same setup in his home, so it wasn't a strange experience for him.
They usually don't ask, but if it comes up, I always tell 'em like it is. If anyone ever complained, it would be an indication that we wouldn't be a good fit anyway.
Even though we're selling online accounting software, we're not ashamed of working at home, we've even blogged about it. We hire consultants and coaches who also work from home. Of course, our secure servers are NOT in our home, they are in a 24/7 monitored data center. I think there might be some people who'd think it was weird that customer support is ringing someone's home line, but transparency and honesty seem to be the way of the future for businesses with integrity, so that the way we go.
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