While I do believe an excellent product can come out of a home studio, obviously a studio with tens to hundreds of thousands invested in acoustic treatment, plug ins, and outboard gear is going to offer more sounds than recording in your living room, and a producer or engineer who's worked on hundreds of records is going to be an excellent source of knowledge and can take a record to a different world. Check out some of the bigger Michael Jackson records for example. The production on those are as entertaining as the music is, of course that's a top dollar production that's extremely rare in modern times, but producers have helped a lot of bands both in success and bettering the product. I'm not the biggest fan of Butch Vig's work sonically, but without his input as a producer Nirvana never would've been more than a little known garage rock band.
Though studio times are getting much cheaper, as they have to stay in business, it's still difficult for your average musician to afford studio time and a producer without backing from a label. I'm pretty skilled when it comes to audio, but I'd love to work with someone more skilled than I. Just like I'd much rather play with musicians who'll better my music than play every part by myself, even though I'm capable of doing it.