[KaVir]

In my opinion the primary advantage of "hunger and thirst" is not one of realism, or providing a challenge, but of serving as a money sink. Food and drink are consumable resources, meaning players have to constantly buy more to replace those they use. In combination with a crafting system, this can provide a strong boost to a player-controlled economy.

Having said that, I do have a strong personal dislike of most implementations of hunger and thirst - although I wouldn't want to see them providing a purely positive effect either.

I would say that the difference between "challenging" and "tiresome" is primarily a matter of perspective. Once a particular activity ceases to be "challenging", it will start to be viewed as "tiresome". The only solution I can think of is to make such activities optional, or heavily restrict how often they can be performed (one-shot quests being an obvious example).