My company does exactly that. All employees workstation are running Linux. We didn't buy a single software licence, ever. We have a couple of machines running various systems (Mac OS X, Windows NT4/2000/XP/2003, IRIX, AIX and Solaris) that came with the machines. For testing purposes I use sometimes an eval version of windows server 2003 (legally downloaded from Microsoft).

The developers are happily using Perl, MySQL, PostgreSQL and others. I used GIMP to create pictures (web, advertising, etc).

We evaluated a couple of ERP softwares (like SAGE and the likes): they stink horribly. We developped our in-house program in a month, and we'll probably release it as soon as it's polished enough.

I don't know what difficulties you're talking about. everybody send and receive emails, browse the web, write and read documents (mostly PDF, sometimes MS Office), synchronize their Palm handhelds. What are those tasks that may possibly not be doable on a linux workstation ?