Anecdotally speaking, I started off working with no life. There is a lot to be said for time periods where you shut out all else and just focus on your business, in fact the YC programme gave good impetus to only "write code, speak to customers or exercise". However doing this for extended periods is a great way to burn out.
Initially any time I took off I felt incredibly guilty about. I however came to the realisation that stepping away, even just for an evening to see friends, allowed me to recharge my batteries and I was able to recoup the lost time and then some.
A company is only really the sum of its people, and if those people aren't firing on all cylinders then it will become apparent. In short, lead a balanced life.