I personally think the worst thing about a server-spanning system is that going to instances becomes TOO easy. Whilst I'm not a fan of excessive waits and inconvenience, I think making instances the main source of content for the game is an equally awful situation.
In that situation (and the same in WoW to the extreme), the dev team spend AGES making amazing zones and then proceed to put nothing but pointless little quests in them and no future content outside of dungeons.

It's absolutely a community and (god I really don't want to use this word) immersion killer, compare it to FFXI where up until Abyssea and the cap raise (and game decline) people were travelling all over the world for various different things.

Yes, we should have dungeons. But they should feel special and like a semi-unusual occurance, not the standard way to play the game. Bring us NMs, storylines, overworld content and endgame zones preaze (not just levels to get the last couple of levels ala. wow, really dangerous zones containing the toughest NMs and really good equipment! Mor Dhona would sort of be a good place for this at this point)