The basic idea behind office hours is that if you can't make people work, you can at least prevent them from having fun. If employees have to be in the building a certain number of hours a day, and are forbidden to do non-work things while there, then they must be working. In theory. In practice they spend a lot of their time in a no-man's land, where they're neither working nor having fun.
Helas, that's so true most of the time. But an office is also a meeting place. That's it, a place for people to share ideas, not working. When the advance of groupware applications, IM and alike, it is less need than ever. And with the advance of working community, like we find in opensource, at one point, the whole concept of a business will be to be rethink again. What about a true community business model?