We had to send my son to daycare by the time he was 3 months old.
My wife got 4 weeks of maternity leave, and then used 4 weeks of vacation to extend it to two months.
I had saved up 4 weeks of vacation/personal time as well, so I took over staying home once my wife had to go back to work.
At 3 months, we started taking our son to a friend who was looking to get into daycare (she was a stay-at-home mother with 3 daughters, and our son was the only one there besides her daughters). It was a pretty decent arrangement, since she agreed to minimize our son's exposure to TV (her daughters watched it during the day), and he got a fair amount of interaction (both she and her daughters doted on him).
The only downside seemed to be that my son developed a fascination with blonde girls :P
However, at 5 months, the friend decided to accept a job offer, leaving us stranded. Fortunately, we found an in-home daycare run by a woman who had both a license as an in-home daycare provider (with attendant prerequisite training), and excellent recommendations from a friend who had sent 2 of his daughters to her for years.
So at 5 months, our son went to a daycare with 7-9 children, all but one of whom were significantly older (the ages ran from 4 months to 5 years at the time).
More than 2 years later, my son is still there, and we're quite happy with the arrangement (aside from a few minor bumps that result from interactions with children of parents that aren't as engaged, or who have some significantly different perspectives on parenting techniques than we do).
Social Interaction My son has established friendships with quite a few children there over time. While the roster of kids attending changes (some outgrew it, some moved, other new kids came in to take their place), two of the children there now are ones who were there when he started, and he's adjusted very well to the others leaving. Generally, I have to say that my son is far more social than either I or my wife. I was shy, even as a kid. My son is most decidedly not. He has also learned how to share; not to hit, push, or bite; and how to take turns. I have seen much older children who don't have the level of mastery of these skills most of the kids in the daycare have.
Health This one is questionable, but I have heard this repeated from many other parents. When we first started my son in daycare, he got sick. A lot. Every cold, flu, or other nastiness (including a bout of hand, foot and mouth disease that wound up knocking me out for 4 days!) that was going around... my son caught it. Many of them seemed to start in the schools, get transmitted to kids in daycare from older siblings, and then get to my son. This lasted for most of the first year. Now, however, my son rarely gets sick. Supposedly this will help him resist a lot of the stuff going around once he gets into school, too. However, I'm skeptical.
Nutrition Oddly enough, our son eats much better at daycare than he does at home. He is a very picky eater for us. At daycare, though, he apparently eats whatever he's given (and our daycare provider prepares homemade meals for the kids old enough to eat solid foods). I suspect peer pressure plays a part in this.
Lack of control We simply don't have the level of control over his environment that we would if he were home, even if we had a baby sitter. Despite our resolutions when planning our parenting strategies, he does watch TV (it runs in the background at daycare, and kids periodically bring in DVDs of their favorite movies/shows). He does get exposed to other influences that we don't love (one boy, now gone, had some behavior problems that included words that aren't generally appropriate for that age, and had a grandmother who spanked him in front of my son).
Cost Our daycare is a fraction of the cost of what we'd be paying at other daycares within our area, and the cost is still significant.
Schedule We lose a bit of flexibility in our schedule. We have to drop him off between certain times, and pick him up before 5p.m. (although we have asked in the past for a little flexibility from our provider for specific circumstances; not all daycares will allow this, though, and many charge exceedingly steep "fees" for picking up outside of normal times). Since we're reliant on a single provider, for days where she is sick or has a vacation, we have to make other arrangements (sometimes on short notice).
Not all daycare providers are the same. For that matter, neither are all babysitters.
You have to do your research, and check references (this is very important; try to at least talk to some people who have brought their kids to the daycare before committing, if at all possible). Also check to see if the daycare is licensed and insured,
In our area, almost every daycare is full, and most use a waiting list system. Frequently they will limit the number of enrollments by age bracket, so even if there is an opening, your child may be too young or old for that particular spot. It isn't uncommon to have to wait over a year for an opening.
Going earlier, rather than later, may have some additional benefits. It makes it easier to drop them off in the morning, since they become used to it at an early age. We rarely have any problems with my son becoming upset about going to daycare, and if he does complain, we simply point out that he'll get to see his friends, at which point he says "oh, yeah!" and becomes enthusiastic.