I have good friends, a married couple, who have a wonderful 1930s craftsman-style home. There is a complete upstairs apartment with its own living quarters, small stove/range, fridge, separate outside entrance, you name it. They've hosted a few exchange students over the years and it's worked out well for them, but that's because the students they've hosted have been super independent, comfortable taking the bus to their classes, living on their own with not much interaction. They love the time spent with their exchange students, but by nature the students would rather be with their friends and in the city rather than spending time at "home."
So, I guess it depends on the amount of time you are willing to invest in showing your student around, getting them acclimated to local customs, etc etc. I think it's a fabulous thing to do!