I dont see how being instanced in particularly bad. Yes MMO is about interacting with others everywhere. But when you're out adventuring with your group and you run into other groups, what REALLY happens? You humbly greet each other, offer help, items and food, smile, bow and be on your merry way? NO! You fight over mobs. You fight over camps. You curse at each other for mob stealing, for training mobs on each other etc etc etc.
On the other hand, if you get in trouble, noone will be around to help. Noone to come and raise. And again being in a real shared world adds alot to the atmosphere. But most of the time all you see is rudeness behind anonymity.
Also there will be no unexpected pvp, no high levels ganking you from out of nowhere. So you see there are pluses and minuses to both implementations.
I'm taking the wait-and-see approach to this game as well. And I'm hoping that it will pick up and be good, but I'm predicting something of a SWG thing here...