I am a huge proponent of working from a home office if you can. Since my work with clients can mostly be done by phone, fax and email—and I work with clients from around the world—it works wonderfully for me.
But some business, and some entrepreneurs, really do benefit from having an office separate of their homes. Sometimes it's because you need a place to meet with clients. Sometimes it's because you just aren't suited to working at home alone all the time. Other times you need a way to better separate your business and personal lives.
The first half of the title of this post is a question I get, in some variation, quite frequently these days. You could change the subject to email or face to face networking or press releases, but the implication is always that some long established marketing tactic has been supplanted by Twitter or Facebook.
My answer is always the same – nothing is dead – but the ways we use them have changed.