When internet chat began, the only ID you had was your conversation partners' names. Nowadays, customizing avatars has gotten to the point where you can recognize other users' avatars based on their appearance, in addition to their always visible name.
What if a virtual world abandoned the default practice of automatically displaying a pre-defined name (made up, anyway), with the option of getting to know a person's name more like in the real world - Introductions and communication (asking!)?
What if YOU chose the names of the virtual people you interact with? What would be the difference? What if you could see the names other people chose for you...?
From a practical standpoint, the current system is probably the most efficient. People with nametags are generally more approachable than people without (Hi, my name is Scott!) but put in the context of a VW game where anonymity is desirable or part of the obstacles that must be overcome, it would be a cool way to set a site apart from everything else.