OP: Thats a very intriguing question, at second glance. Here's my two cents:
I should like to mention before hand that I have not played any MMORPGs, nor probably ever will. However, I've been shown how they work by acquaintances, so I know the mechanics and the general get-up and all.
One problem I see with erotic, or "hentai" MMORPGs is the visuals. To reach the critical mass to sustain itself, MMORPGs must sell like all hell, and thus run on outdated client machines. That in turn means visuals have to be restricted to a certain, undesirable level. I mean, do come on, I'd rather jerk off to some chopsticks arranged on a table than to something on the level of, say, WOW. Personally, what intrigues / turns me on about hentai is the beauty. If I wanted to look at crippling uglyness, I'd just download some porn or play some video game from the eighties.
The second is the storytelling. You basically have two hugely different user-bases: Those who want a story, and those who want a quick fix. So what they did so far was cater to those who want a quick rub-rub and that's it; resulting in those "multiplayer orgies" that don't do jack all for people like me. This in turn also means that you get no big return business: No storylines means no long-term interest means no repeat customer spells death for your game. On the other hand, a story-heavy game would scare off the main customer base - i.e. legions of super-horny teenagers who would be frustrated by sitting there playing through some game for hours with an aching crotch before they get what they're there for.
The third is the interaction. I must concede I somewhat agree with akaltar. I can only speak for myself, but I'd probably not be too keen on blabbing it up with others in a sex-centered game, especially knowing the usual online-game userbase, which is fixated mostly on tired internet jokes and "LOL, YO MOMMA!111" spamming. That does not entice me to get over my super-shy approach to talking about my likes/fantasies/whatever, which would probably be a somewhat integral part of a "hentai" MMORPG. It's tough enough for me to talk about those with my girl-friend, let alone with some random "LOLZ 4 TEH WIN" internet 'tard.
The fourth is, well, politics. Surmise you get it off the ground, and it becomes popular - imagine the political shitstorm. From what I hear, you germans have enough troubles with your politicos identifying WOW-playing-youngsters as the root of all evil. Add to that the media flurry about how they found PORNOGRAPHIC! IMAGES! ON! THE! COMPUTER! of that winnenden guy, and then imagine what happens if teenage boys or girls would be playing (and undoubtedly they would, age-based restrictions simply. do. not. work.) a PORN BASED ONLINE COMPUTER GAME! You'd have the entire political caste in your corporate headquarters with flamethrowers and crosses the next day.
PS:
Well, I think they would be good if they would have tons of quests for getting special things and such.
Sorry to burst your bubble
, but you do know how game designers work, right? "Kill 500 tree stumps to get 50 branches, then kill 500 slime-fish to get 50 arse-fins, then use those items to get a wedding ring made, deliver that to janitor Blow Job of Quest-Town, solved"
In a hentai-based game, that would end up something like "boff 500 were-cows to gain 50 udders and give a hand-job to 500 dickgirls to get 50 sunglasses, then use those items to get a golden condom made, deliver that to king Black Beard of Quest-Town, solved".