as some have said, job hunting while unemployed can be very stressful, increasingly so as time passes. Also, as time passes, potential employers start seeing long unemployment periods suspiciously, unless you have valid reasons for it (family care, education, time-off...), compounding the difficulty of finding a job.
If you are in a hot sector and have hot skills, it may not be a problem, but the reality for the majority of roles and industries is the opposite. My opinion is that potential employers do prefer people who have a job (it provides an indirect validation of your skills). The ability to start immediately is most of the time a plus but not a game changer, given that the base assumption is that candidate will need a notice period. having a job also helps in being more relaxed during interviews and more daring in contract negotiations).
Yes, it is easier to find the time to go to interviews, but today many of the initial rounds happen over the phone and skype. For senior positions it is not rare to be interviewed over dinner.
Personally I would always prefer to keep my job until I have a signed contract from a new employer (unless, i guess, I hated my current job so much to be a mental health issue or I was completely burned-out)