On the surface there is nothing wrong with the proposal. Voluntary community service can be an enriching experience both for the child and the community. The trouble starts when the government steps in. The inevitable effect is the substitution of individual volunteerism by a huge bureaucratic machine that subsists on tax money. Like many bad proposals, the detrimental effects show up slowly, but when they do, they are hard to remove.
Eventually, these kind of proposals convert non-governmental organizations that flourish on private philanthropy into inefficient arms of the government. Furthermore, as this article points out, those who lead these social-services groups tend to become advocates for government-funded solutions to social problems. The result is more social problems, not less.
Volunteerism is a wonderful thing but to be truly voluntary and useful, it needs to be more than an arms length away from government control.
I suspect there are ways the government can make a positive difference to the issue by encouraging high schoolers to do public service at private voluntary organizations (possibly by offering certain incentives) without actually stepping in directly. However, I fear that the plan Obama has in mind is more sweeping than that and (hence) more likely to do bad than good.