When Megeara was just a young warlockess in her mid 40's she switched servers to follow her toyboy, a lithe young Orc who promised to take her up the wailing caverns and show her the time of her unlife.
Little did she know that the fit teen would become a porky crime-lord and confirmed ladyboy afficionado, eventually succumbing entirely to the debached lure of the pleasure pits of Silvermoon.
Yep, Meg had joined an RP server (or arrr-pee as the pirates say). She gained a backstory and became a blood dancer in the service of Lady Sylvanas. She ran slaves the length of Stranglethorn and presided over gnomish gimp fights in Gurubashi arena.
Eventually she rose high in the opinions of the great and good of the server, and even represented her guild in the high council of the Blood Pact. The fat orc became Guild Leader. All was well in ye landes of Azeroth.
And then the lich king struck. It wasn't the zombie plague, or even the frozen northern lands that caused our downfall. No, it was the curse of accessible raiding.
Most of the senior members of the RP guilds went off raiding the exciting new dungeons of Northrend. In order to progress, they joined Proper Raiding Guilds who had no time for the thees and thous. No time for a bit of casual erp in the Silvermoon pleasure pits. No time even for gimp fights. Our guild withered to a rump of a few people who weren't online much. You can't RP or raid with folk who aren't there.
So what went wrong? Actually I don't think that anything did. It's just that roleplaying in WoW is less interesting than raiding. Mostly I RP in wow when there's nothing better to do. Outside of WoW it's a different story. Last year I had the dubious honour of being named 'roleplayer of the year' by my pencil-and-paper gaming group (a rare example of being both a winner and a loser at the same time).
I think that the difference is that WoW role-playing has no effect whatever on your character. Your character doesn't get better items or improve their stats, or get richer in WoW through RP. And it doesn't affect the world, which is essentially static (there's a fine article about Azerothian Physics which bears this out). It is just mental masturbation, without the payoff.
Whereas in p-n-p roleplaying you really are playing characters in a story which may change the game world, and will certainly change your character, even to the point of perma-death. The Story is the point.
I don't really see how you can create Story in a static world, except to use it as a backdrop, and then you may as well be playing p-n-p.
All of which is to explain why, despite being a role-player for over a quarter of a century, I can't be arsed to RP in WoW, and am much happier down a dungeon doing my l337 DPS and picking up purples.