There's an absolutely terrific discussion about child care going on in the comments section over at 11d. It's stimulated by Laura's review of Home Alone America: The Hidden Cost of Day Care, Behavioral Drugs, and Other Parent Substitutes by Mary Eberstadt. I've made several responses on Laura's blog, but have enough to say that it deserves its own post. (I just got the book out of the library, so will presumably have more to say when I've actually read it.)
As I've noted before, lots and lots of affluent parents who have either an at-home parent or a full-time nanny also send their kids to part-day preschool for the socialization and education benefits (and to get a break). And there's good evidence that high-quality preschools (such as the Perry Preschool) are often more educationally rich and stable evironments for at-risk (mostly very poor) kids than they're likely to experience at home.
So, I don't think there's a lot of controversy around high-quality part-day or school-day length care for preschoolers. (If Eberstadt is going after that, she's even more radical than Laura suggested.) Or rather, the real controversy is around whether it's valuable enough that society should figure out a way to pay for it for all kids, or even just all high-risk kids.
Where there's more controversy is about full-time care -- which often means 50 to 60 hours a week, once you've added parental commuting time to a full-time workweek -- and care for infants and toddlers. Here's where some of the rigorous studies (most notably, the NICHD-funded Study of Early Child Care) suggest there might be some negative effects. But the effects are fairly small, not enough that I'd tell anyone to change their behavior based on them.
So, if we don't think child care is terrible for kids, why are we forgoing the not insignificant amount of money my husband could be making building Oracle databases? For one thing, he was bored to death by his old job. And he really enjoys spending time with the boys (although, of course, some days are better than others) and values the close relationship he's developed with them.
Our lives are a lot less stressful with him home. We don't have to rush to get the kids dressed and out the door in the morning, and when I get stuck in a metro delay on the way home, I don't have to worry about late fees accruing at $1 a minute. We didn't have to get on waiting lists the minute I knew I was pregnant (literally what you need to do if you want center-based care in the DC area). We don't have to deal with scrambling for coverage when the boys are sick, or when a nanny suddenly quits. He does most of our errand running during the week, so I don't have to face the supermarket on a Saturday morning.
Laura mentioned (in her comments, scroll way to the bottom) the recent study that found that women rated actually caring for children as a fairly low-pleasure activity, slightly above housework but below cooking. That study was of working women; I'd love to see a similar study for stay-at-home parents. There's more time for their kids to get on their nerves, but I think their interactions are also less likely to be stressed by the pressures of trying to get kids fed, homework done, and ready for bed at a civilized hour.