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There's no single, simple answer; here are some points to consider:  

The more you'll be moving from location to location, and the more you'll be relying on one computer no matter where you are, the more you'll need a laptop.  
Depending on what kind of work you do and how much you want to spend, your choice of laptop vs. desktop will be based in part on things such as keyboard size and arrangement, size and quality of monitor, CD-ROM drive availability, internal vs. external modem, and weight.  
A laptop with a "docking station" might be the best of both worlds - you'll have the portability of a laptop and the full-size monitor (and other features) of a desktop.  

Even though your employer says you have to buy your own computer, don't overlook the possibility of "salvaging" one from the office. For example, there might be a PC in the office that's not being used much and could get more use at your home. Or, there might be some laptops that are available for loaner use; if you only telecommute a few days a week, you might be able to borrow one instead of buying one.   
 

Generally, employers have provided the equipment for telecommuters; it's viewed as providing the "tools" of the workplace wherever it happens to be. 
In some cases the employees have been asked - or required - to pay for their own PCs as a condition of telecommuting. This can cause a real hardship on some employees. If the equipment budget is tight, here are two solutions: some employees already have their own PCs at home and are willing to use them; employee purchase plans (with payroll deduction, perhaps) can be arranged to keep costs down. Keep in mind that in some cases it's best to take the PC that's on the employee's desk in the office and move it home; that's where it might be used best.