Was reading a good blog here on this one: http://www.mmorpg.com/blogs/lordaltay1/062008/1886_Player-Housing-Where-is-it
Personally what I prefer is old school style housing whereas players can drop them down pretty much everywhere. There can be some order to it but for the most part I'm a big fan of the sandbox approach to this.
Here are somethings really liked about old school approach to housing (UO style MMO) :
1) Houses can be put down almost anywhere. This way players can build a town. Contrary to what some skeptics might think- building a House is not really a hardcore activity. It's actually a very creative outlet akin to designing a costume (City of Heroes) or dying armor (Guild Wars, etc)
2) Player Run Quests Can Thrive Here. Would be interesting if players could somehow create quests around their house. Obviously, you would need a Sandbox MMO to provide a suitable atmosphere to fully exploit this.
3) Nice place to display trophies. Achievements are a big part of Games in general. You will be hard pressed to find any game that doesn't award you with titles, scoreboards, or what have you. Houses can be a nice place to display gear and belongings. In UO there was an overhead view that allowed you to see into other people's houses. This was cool
Reference: Ultima Online House Design
4) Very pleasant distraction. Would keep players busy maintaining their house populating it with furniture, etc
5) Very nice meeting place for Guilds to hold Events. In most games you see Guilds try to establish an area to hold an event. If Guilds could congregate at a house this gives them a meeting place. Also, they can sort of naturally expand to build an entire city and coexist there assuming the game is sandboxy enough to provide localized entertainment in that area.
6) Houses are persistent state. That is the one interesting thing about a House- it stays online even after I log off.
The powerful sandbox component that Player Housing introduces it actually gives players the ability to create their own towns naturally w/o developer assistance. The bad- obviously it can be a big pain dealing with the litter and congestion that housing brings. EVE Online assess taxes of a sort to maintain your House. I believe you have to purchase a Charter to establish a POS (player owned structure) in Empire and pay taxes for the extra security. In City of Heroes, the player run bases also were assessed a tax
City of Heroes did something interesting with the supergroup bases. You could also have base raids whereas two guilds agree to fight at the supergroup base. This was very interesting. First, we sent out our scouts to look around (stealth / stalkers). Once we learned the terrain, we would begin the attack in earnest. The supergroup bases were somewhat relevant to the game via the Teleport devices and group banks you could have. This was great stuff.
Back to EVE Online what they did was a full blown implementation. Alliances can takeover space and 'rent' out this space to their partners and allies. Everyone in this Alliance coexist locally in space and cooperate to protect it. In Regions like Providence, you will find that the Alliance there has a no-shoot-neutral policy. It is interesting how the players have taken over this part of 0.0 and created a player enforced order.
So this brings me to my final point- Player Housing will empower players to create virtual online communities. Like minded players will perhaps be attracted to these communities and settle down there.
A good example of this exists in the title Second Life. At Midgar (player run city), you see a very impressive recreation of Final Fantasy. The owners of the sim have rented out space to tenants to run shops and business that actually market apparel that sell for real world $$. Second Life is another form of a player run housing but its pretty impressive what they have done
Reference: New World Notes
I think LordAltay wrote a great blog on this already but felt I should try to cover some examples from games I've played. Anyway I really think any blog that discusses this topic should for sure portray examples of games that employed them already. There are some really cool MMOs worth checking out if you want to see this in action.