I have visited quite a few startups in san francisco and the bay area and saw a growing trend... booze. And lots of it.
When I visited Yammer I saw engineers drinking scotch at their desks while working.
Is this just a hip thing to do or do people find themselves to be more productive if they're more relaxed after a drink?
Are there any legal issues to be aware of for startups to start having booze around for their engineers around the office?
Attracting good engineers is a full time job and many companies do things, alcohol being just one of them, to appear more relaxed and friendly places to work.
From experience, there is one type of work where alcohol does help (to me anyway): design. There have been occasions where having a drink or two helped get the creative juices flowing.
At the same time, I would never drink and try to push code live to the server :)
I'm not sure if there are any legal restrictions from you keeping booze in the office kitchen (might vary from state to state), but there sure would be issues if people get wasted and someone gets hurt.
Your mileage may vary. Drink responsibly.