I can't agree more that none of the MMOs really seem to deliver on their promise. How to improve on MMOs has been an issue to which I've devoted quite a bit of thought lately. I can identify a few issues.
First, the dangling carrot/endless staircase. Players are motivated to get their avatars powerful, so that they can participate in higher-level challenges where the prizes are better. That is not, itself, a problem. The level grind can be the best part if it's done right. Eventually, though, they're going to get to the point where they wonder what they're doing it for. The only way to prevent it is to guarantee that the process of getting there is always interesting. This means either they have to keep getting higher without seeing pattern emerge - a difficult situation because it means you have to have the full variety of content at every tier, and it segregates players based on character levels - or you have to ensure that there's a lot of ways to climb the stairs, so that every alt is something new - which means you have to do something to abandon the high-level characters they've already invested so much in. You don't have to keep them interested forever, just for long enough for the social elements to get their hooks deep in.
Second, content shortfalls. Your audience always wants more. There are a lot of ways to solve this: you could just make more, you could design it so that it all lasts longer, you could give the players some (limited or unlimited) ability to make and share their own content, you could let the content be generated procedurally or at random. I'd like to see more of the last two.
Another problem is that more than a few MMOs seem to be unwilling to abandon the fantasy-adventure archetype. The fantasy isn't the problem (aside from arguably being overused). Rather, the adventure aspect is the problem. The games that acknowledge any pretense toward convincing the character that they're anything but a small cog in a big machine - these games tend to have much better atmospheres (ignoring such piddling concerns as quality of graphics and how good the guilds are). This is just because the whole thing makes more sense that way.
Some conclusions I've drawn from this are: maybe permadeath should be an option. Give the player several characters, and after the first month, they can only die ten times before they're gone. Or provide some other mechanism for the player to lose the characters permanently. Maybe you should invent a world from the ground up to feel like an MMO, or use existing IP that could be adapted easily.
In fact, the more I think about it, the more I realize that Pokemon could potentially be adapted into the greatest MMO ever made.