Hi Dennis,
Your opinion is noted and is one that I hear a lot. However, I don't think you should pass up on a legitimate business deduction just out of fear of being audited.
Schedule C filers (sole proprietors) are the most audited group of taxpayers, but does that mean you shouldn't file a Schedule C, or that you shouldn't be in business? Of course not. The first would be illegal, and the second would be plain silly.
Why then would you pass up on a legitimate business deduction if it could reduce your tax burden? (Btw - I am a pretty conservative CPA, I would never recommend a deduction that I didn't think was 110% legitimate)
If you have legitimate home office expenses, you should take advantage of them. After all, as you stated in your post above, if you're in the 25% tax bracket, your home office deduction could save you approximately 40% (25% + 15.3% SE tax) in taxes for every dollar you spend on your home office. This may not be substantial to you, but it is very substantial to myself and many other home based business owners, especially those in their early years of business who can use any tax break they can get.
I respect your decision to pass on the home office deduction for your own return, but I disagree with your opinion. I believe passing up on a legitimate tax deduction out of fear of being audited is poor tax planning.