I don't think it can work often, just because you'll eventually get a bit emotionally attached unless you keep yourselves distanced, like what happened with my best friend (call her J).
J and I were pretty much best friends for a long time and we did pretty much everything together. Played games together, went to school together, slept in the same bed.
We eventually (when a little drunk) decided if we thought the 'friends with benefits' thing could work, so we tried it that night.
It worked for a few months, with the both of us working things out. One thing to note, you're each in it for yourselves, but a guy has got to do a fair amount of work for both of you, so you've gotta either be a total sex-machine, or really open to criticism, which I think if fine, because it'll make both of you better lovers. ;P
Eventually we got too close and started dating, and now we've been together happily for two years. I always loved her, but now I'm in love with her and I couldn' be happier.
So pretty much, there's three ways it can go; You could start feeling a bit uncomfortable with each-other and start seeing eachother less and less, you could get yourself into a relationship and completely ruin your friendship, or you could get into a relationship and have a fantastic relationship with them.
I have the latter of the three, since J is almost a mirror image of me. We love the same food, we like the same jokes, same games, talk the same, it's really quite good.