Well, not to put too fine a point on it, but there is still a large chorus of players who seem to think -- contrary to good game design -- that some things "must hurt" in order to provide challenge. The Development Team of UO have agreed with this to a varying amount of degrees over the years, but certain things show that "must hurt" is alive and well in Ultima Online.
Good game design sort of works to the contrary. You don't punish your players for having a life outside of the game. I'll not get into the whole death/lose everything/item insurance issue because it's endless, but with things like fame, loyalty and stuff like that, decay rates are plain and simply a false mechanic put into place in sandbox games in order to be one of those things that you must "strive for" regardless of the fact that they make no sense.
Take fame and karma for instance. You go out and kill a ton of things, and you gain fame and karma, but you can only achieve those higher levels by killing bigger things. And yet, one single death wipes out more fame and karma than you earned for killing a significantly larger amount of creatures. It may not rob you of your title immediately, but it could. And there is where it stops making sense. The only way you can retain fame and karma is plain and simply by not dieing. Which is funny, because, you know, dieing isn't exactly what I'd call a horrible anti-karmic thing, and if I kept running up against 20 demons at a time and dieing, you'd think my actions would gain me more fame (simply from the standpoint of, "Did you hear about that idiot who...?").
Decay is nothing more than a reason to have to continue to perform certain actions. You might get bored otherwise, and the development team would have to put in more things to keep your interest. What they fail to realize, of course, is that having to maintain those grinds is also as boring as ****, and therefore, they're going to have to put in new things anyway.
There is a certain game design philosophical logic that is missing from UO, and has been for many years. Too often does this game take the approach of punishing everyone to try to lessen the effect of scripting, and in doing so, they sort of ensure that the scripters are the only ones that profit. Grinds are not a perfect solution. Daily quests in certain games are bad enough, but they are distracting content to give you something to do if you're looking to improve in a certain area. Grinds are bad enough, but if they have a goal in sight, no big deal. I think of the Firelands area in WoW where you spend a lot of time grinding to open up different areas of it... it takes days upon days of consistent playing, weeks if you're casual about it. But eventually the whole place is open, and there are a few goals that encourage you to grind a little more. But the grind is finite. You don't lose progress just because you didn't log in for a week. Decay takes grinds and makes them completely arbitrary, and it's just not right.
In short, decay should never be used as a design philosophy.
Ever.
