The problem comes later where a friend-coworker is found to perform poorly/behaves inappropriately/slacks off etc. and has been given multiple warnings. You are now in a difficult position of having to prioritize either your professionalism or your personal relationship with them.

Given that friendships tend to last much longer than jobs I'd hazard a guess and say that most people would let the issue slide.

There's also the risk of cliques, concerns over unfairness in internal promotions and pay rises, and groupthink from being surrounded by like minded people to be worried about.