I agree that there has to be some moderation system. But its interesting that we've never seen it come to fruition on MMORPGs. We've seen it work with community based sites (like Neopets) which actually balance their entire world on user-generated content and feedback, but nothing as dynamic as WoW.
I agree that user generated content is the future, but think that it needs some serious controls put in place to avoid scenarios such as the ones plover points out.
On a more fiscally related note though, if MMORPGs did start to allow user submitted content, then would it be right to continue their pricing structure? Therein lies another discussion!