We had this in flowdock before we switched to slack, on a team of probably 700 or so at the time. It made it far easier to filter out chatter when dealing with an urgent issue (no need to change rooms or remind people to be quiet for a while), and I haven't really noticed it encouraging pointless chatter. I seriously miss this feature in slack.
I'm not sure. I think with the benefit of hindsight, I liked it better on balance, but I wasn't involved in the decision. It was definitely a terrible resource hog, even more so than Slack, and the iOS client wasn't quite as polished IIRC.
Then it would be a recipe for endless sub-discussions diverting from the topic, and disaster...