So should mothers work or stay at home? In a way, there is no good scientific answer to this question, because there is no way to do a controlled study (this would require forcing women randomly to stay at home or work, and obviously will not happen in a free society; maybe an opportunity for North Korea to do some good in the world?). Leaving this issue aside, however...
The real answer seems to be two-fold:
1. In general, the type of childcare (so long as it's fairly high quality) doesn't matter. Children thrive equally well with constant maternal attention, 50+ hours in daycare, or something in between.
2. BUT: it depends very much on the particular child, parent and situation. Some children will be better off in daycare; others will be significantly harmed.
I was surprised by the results of point #1. You would think that with all the hullabaloo about working mothers and the importance of maternal care and warehousing children, that there would be a significant difference between children of working mothers and SAHMs. A lot of research has been done on this topic over the last 20+ years, and the scientists doing it are in general highly motivated to find dramatic results one way or the other (since that's what makes research well-publicized and them successful), but everyone has come up empty.
Here's a link to a summary of the results from the most comprehensive study on the subject, which spanned 15 years and included over 1000 children. Results: There's basically no difference, and the (small) differences which exist are conflicting. (For example, attending a child care center slightly increases cognitive and language development, and also behavior problems.)
Even studies on the effects of staying at home for mothers are contradictory. For example, this study shows that SAHMs of small children are more depressed and less healthy than working mothers; this study shows the opposite.
What these results suggest to me is that parents should feel free to make whatever decision they like best. The whole "mommy wars" thing and angst about mothers not personally caring for their children is a waste of time.
However, there is still point #2. I will discuss this (contradictory) point in a separate post.