Any type of security solution has pros and cons. The advantage of blocking by IP address is simple: You are protected from known attackers, malware or rogue websites that are assigned or using their own servers. Blocking an IP address is more effective than blocking by domain name because existing and new domains that use the same IP will not be able to communicate with your computer.
When you use an effective solution to protect the computers or network from a malicious IP, there is a drawback. Any reputable websites that share the same IP address with malicious sites or servers are also blocked. In addition, some malware distributors and internet attackers will use the fast and double flux techniques. To learn more about the said attacks, please refer to the security advisory by ICANN in *PDF format or view the HTML version using via Google website.