This is basically asking if you wanna become a permanent resident of Second Life: VR Edition.
On the one hand, I'd rather be able to just log in for an hour a day like any other game than stay there permanently. On the other hand, if people are moving in permanently, I can see it being treated as emigrating to a new country. And since, barring a way to keep your body alive or make a replacement, you're there to stay, I imagine it would be taken more seriously than Second Life currently is, since it'll have a full-time dedicated population.
As for productivity, that depends completely on how you use it. Mindless hedonism is just one potential outlet. I can see architects, engineers, and military tacticians field testing their ideas easily with this system. You can simulate various limited resources to see what methods designed to conserve them work best, which can benefit people back in the real world (and given the future is likely to have wars over dwindling resources, it can save lives in the process too). And of course, total freedom to design means those with creative talent will be valued for their service; you could make a killing on designing games, world scenarios, or just being paid to tell interactive stories.
My main concern is, though the scenario suggests that the servers shutting down is not possible, realistically that should always be a threat. Which would make a failed server this world's equivalent of a natural disaster unless you had a lot of redundancy built in. And even if there's no physical resources, a 10-mile high palace should take up more server space than a one bed shack. So unless we're talking near limitless storage capacity, space on the server still has value, which could be bought and sold as any other commodity. Hello virtual economy that has enough similarities to the real-world as to be a competitor.
So, to sum up: No to becoming a permanent resident, even if it sounds like fun I'd rather keep my mind in case of a server crash. Yes to logging in temporarily like any other game. Can't think of a time in my life I'd become a permanent resident.