I'm not really sure I like the day and night cycle of Lord of the Rings Online. What I do like about it is that it makes a difference, and thus feels real. There are even a couple of quests that only work at night. And with 3 hours to a complete LotRO day, you never need to wait more than one-and-a-half hours for the other part of the cycle. I never liked the World of Warcraft day and night cycle, where the time in game was the same as the time in the real world, but night was a light as day, just having more blueish colors, and it didn't really matter.
On the negative side the night in LotRO is too dark sometimes, especially if you want to go exploring. You know the landscape is beautiful, but you just can't see it because of the dark. And it's dark for over one hour, which can be annoying. Your personal torch, which you can activate with Alt+F10, isn't illuminating more than a small radius around you. And you can't see other people's torches. Wouldn't it be cool if you could see other people moving in the dark by the lights of their torches? Well, if it gets too bad I can fiddle with my gamma settings, but I don't feel it's optimal.
If you designed a MMORPG, how would you handle the day and night cycle? How many real world hours per virtual world day? How much difference between light and dark? And how would you like light sources to work?