How many of you neglect to sleep for the majority of the game, playing the game's major quests and set-pieces at lv. 1? Does this add or subtract balance from the game? Advantages/disadvantages?

Staying at level 1 via never sleeping is one way. The magic of the PC command console is another. Picking seven major skills that you never touch is another still to stay at level 1.

There are at least a couple quests that require you to sleep. If you want to serve a jail sentence, you need to sleep. The Main Quest requires you to fetch a Daedric artifact from a Daedric Shrine quest. These shrine quests have minimum level requirements and the lowest of them is available at level two.

You never get to see the gear or foes of higher levels. Your foes never get stronger, while you can improve your skills to 100. You are stuck with your starting attributes (boosting by magic notwithstanding). It is easy to become way overpowered. Heck it's easy enough to become overpowered even when you level.

If you're looking for an easy way to make an easy game easier, I guess its viable?

I roleplay deeply enough that I would never ask my character to go without sleep. Never. I find making leisurely progress to level 20 and capping my character there to be perfect. I do so by picking a few major skills to never touch.

There are certain quests that are better done at low level. The first part of the Main Quest is like that. The reason is that as you level up, the enemies get tougher, but any companions you might have do not, so you are more likely to lose them if you're at a higher level.

For the most part, all you accomplish by staying at low level is making the rest of the world stable. You never see the tougher creatures, and the bandits always wear fur armor. If you do the main quest that way (there is a rather difficult way of getting the required daedric artifact at level 1), you'll see no daedra more difficult than scamps, and even the boss battles will be fairly tame.

I've done a "permanent level 2" character once, by the "never use any major skills" method. I did the complete Mages Guild, Fighters Guild, Main Quest, and Arena with that character at that level. There's nothing "wrong" with it, once you accept the idea of possessing skills you don't use, and in some ways the result is a more "real" world in which things stay basically the same all the time.

Not to say that if you finally decide to level up, you'll have a screwed-up character, as the attribute modifiers will only work for the first level, and in all the others they will only go up +1

Makes no sense for me either this way. With a simple 200 HP cap, I've found a pretty good balance. What bothered me a lot is the insane amount of HP nearly all characters can get, especially Warriors.

For a few of my chars, I picked the skills I would absolutely use and enjoyed. I would avoid sleeping to level up and continue playing raising my skills until I felt like levelling up, and my skills were sufficiently high enough to deal with newer and stronger enemies.

Oh and I would use the 'wait' function next to a bed to keep it real.

Man, what a silly way to play. That would be like driving a car with only three wheels.