As an adult child who did this SUCCESSFULLY, I can tell you what worked. First...
1. I had responsibilities (including financial responsibilities) in the house. I was responsible for all the dishes, all the shopping (including the cost thereof), and keeping my space & bathroom cleaned, as well as occasionally doing more major cleaning issues. I was also responsible for the cable bill (even though I never watch TV -- this was just my household contribution and since it was the same every month, I could budget for it). This allowed my parents to actually appreciate my presence.
2. It was time limited. My husband was deployed abroad, and I felt that I could not take care of our 3 children without any support in our east coast home so I move back to my parents' home in California for the 9-months that he was deployed (it was NOT unlimited). It allowed us all to appreciate the time we had together since we knew we would soon lose it.
3. We spent time together (it was NOT a hotel). We ate dinner together every night. My parents delighted in watching my 3 children (and I appreciated the break they gave me), and I delighted in going shopping with my mom (which my dad hates to do) or reading the daily news with my dad (which my mom hates to do). When I hear of situations where it does not work, it is mostly because the child goes out every night, and just uses their parents' home as a way to avoid paying rent and having responsibilities.
I believe that if you follow these three situations, there are MOSTLY benefits.
1. Time together
2. Help for each other (shared responsibilities)
3. A greater appreciation for each other
Indeed, the only problems are more minor: 1. lack of privacy (but temporary), 2. lack of "getting on" with your life (but again temporary), 3. difficulty when it ends (I faced this -- when my husband returned, it was very difficult for me who had become accustomed to my parents' help).
However, I DO believe that if you do not have these 3 requisites, you can have many SERIOUS problems:
2. Unbalanced registration
4. No appreciation
I should also add one other anecdote for a child who never leaves (i.e., after high school graduation). In that case, collect a set amount every month and save it for your child's move-out costs (i.e. don't actually keep the money). Otherwise it may be impossible for your child to save that money to move out because rent, deposit, etc are expensive. This is different.