Some people I know have implemented it as a replacement for a file server but I wouldn't really recommend it, yes you can map their home folders to their My Site personal folders so it is achievable, however, if your users are light users, and by light I mean their home folder contains a few word/excel files etc then yes it's a viable solution, but as soon as they start storing videos, mp3s and 100's of MB worth of files then your MOSS server is gonna take a battering.
Keep them seperate, that'd be my recommendation.