To answer your question, I decided to experiment with your build. I tried to replicate your fireplace as accurately as I could, while limiting the size of the structure surrounding it:
I tried to keep the base structure of the fireplace as close to identical as I could.
I first attempted the fire with the wood planks shown in your pictures:
Unfortunately, the wood burned down to nothing, and the fire eventually died. I then tried it with Netherrack.
Everything seemed to be going well. I thought I'd successfully completed the experiment, when suddenly:
EVERYTHING QUICKLY WENT HORRIBLY WRONG!!
The end result to follow:
Alas, my structure (house) was destroyed. I feel I didn't even get to know my creation, for it died within minutes of me setting the fire.
Long story short, NO. The fire will spread to your house.
five wooden blocks were harmed in the making of this answer
EDIT It is worth noting, however, that out of the 4 times I've rebuilt/retested, every time the fire has started at the bushes along the outside of the fireplace.
You are using version 1.1, and new villager behaviour, including populating player-built houses, is not implemented until the 12w07a snapshot. This will be included in the 1.2 release.
If you are running a new enough version, a house is a structure:
- made of planks, with walls, floor and ceiling.
- with a door.
Best Answer
Advantages
Wood is quicker to obtain than cobblestone, as you get 4 wooden planks for each wood block.
Wood can be farmed (more easily than cobblestone can be), meaning you don't need to destroy the landscape to build your house.
Transported as logs rather than planks, you can carry a lot more in you inventory (as you can 'expand' the logs into planks as you need them.
Wood fits better with bookcases, chests etc. to give a more homely aesthetic.
Disadvantages
Fire caused by lightning
Creeper explosions will do more damage
Fire caused by lava, expected or otherwise
Farming trees can be tedious, especially if you have to spend extra time removing the branches from large trees
Fire caused by your own flint and steel in a moment of carelessness