I did some research on this a few years ago. Here's a summary of the conclusions:
The advantage of using excerpts is that the home page of the blog reveals more posts. The page can be scanned easily and there's a higher chance that a visitor will find something he/she likes. Also, the visitor can easily locate a specific post if he came looking for one.
The downside of using excerpts is that it reduces the likelihood of the user reading your latest post, because now he has to make a conscious decision to read it. By default he only sees the excerpts and he needs to decide to press the Read More button. Without the excerpt all your visitors are exposed to the entire post, and you only lose the visitors who decide to abandon it. With the excerpt no visitors are exposed to the entire post, and you only gain those who decide to read it. This will usually be a much smaller number. It's an opt-in vs. opt-out problem.
When your posts are very long and/or contain a lot of visuals, it's best to use excerpts regardless of the dilemma above. Also when you post frequently and your posts are longer than a couple of paragraphs.
When it's very important for you to make sure that your users read your posts, it's best not to use excerpts. Also, when your posts are short, using excerpts can be detrimental since the navigation that they introduce is redundant.