Why develop a public blog for your company?

Because humanizes you. Microsoft’s Robert Scoble, an enthusiastic blogger, doesn’t speak for Microsoft. However, he represents a voice for Microsoft which isn’t a marketing sales pitch or PR spin. Before Scoble, Microsoft’s customers saw Microsoft the corporation: when they read Scoble, they realize that Microsoft is an entity with people with whom they can identify.

"Big business battles to keep up with the bloggers" notes that:

Companies have increasingly become the subject of the bloggers. But this has created a major headache for the business world, because blogs - literally "web logs" - can be set up for free and accessed, read and updated by anyone with internet connected computer. They are, in essence, a constantly evolving online conversation. And one that companies cannot control..

While you can’t control blogs or bloggers, your people can blog.  Trust your people, let them blog, and start a conversation with your customers.