This article discusses how to use 301 redirects correctly and their effects. It makes note of how important redirecting smartly is, especially in post Penguin SEO. The first point is that 301s pass link juice whereas 302s, in most cases, do not. The amount of link juice that is passed increases the relevance between the two pages increases. With this in mind redirecting everything to the homepage is not effective. Search engines may even look at a site redirected that way and ignore the redirect. The next major point is that any bad backlinks that pointed at the old URL will now point at the new URL. If this is a potential issues letting the page 404 is a suggested option.