Hot-desking as a single solution can not work, however having dedicated areas that are designed for flexible working can be very useful. It unlikely that an office with 400 employees will ever need 400 desks, therefore there is the potential to design the space so that more people can manage in less space without it impacing negatively on work output.
Some people really want the home away from home that a desk offers, others do not need that and function being able to just plonk down where they fancy.
It's also generational, those used to always having a desk see status in desks/offices etc and feel abandoned without one, while younger workers, those atuned to wireless technology and it's possibilities, are pushing the options to work anywhere they choose.
A sensible approach is to cater to all needs and develop spaces that are multi-functioning, with quiet rooms, collaborative spaces, permanent and flexible desking, wireless networking and homeworking options. There's little point making a finance clerk hot-desk when they need a desk daily, along with space and storage etc, but some other occupations can bounce from place to place and work anywhere.
Operating hot-desking purely to cut costs is counter-productive, but with most businesses operating at an 80% occupancy rate it makes sense to think intelligently about how space is used in order to save money, energy, time and create good, dynamic environments that people can thrive in.
The biggest issue I find is getting the 'output not input' mentality across to management teams - they still want to oversee their staff and ensure that every minute is accounted for instead of realising that good work is not always done between 9 & 5.