By allowing for a more flexible work schedule, you create an atmosphere where employees can be excited about their work. Ultimately it should lead to more hours of work, with those hours being even more productive. Working weekends blur into working nights into working weekdays, since none of the work feels like work.

A great post from Zach Holman on operating hours at GitHub. For me, I know that even though I'm in the office at 8:30 or 9 in the morning, on most days I don't actually start being truly productive until after lunch.