[Jazuela]

The first and foremost issue is immersion. In a game where roleplay is the focus, the concept of "levels" is immersion-breaking, because levels is strictly an OOC code issue and has nothing to do with your character's life in the fantasy gameworld.

Next, is achievement. Achieving a level is an OOC achievement. Achieving a greater ability to [insert skill here] is an IC achievement. Either are perfectly fine goals to want to reach, however again - in a game that focuses on roleplay, the more preferred would be your -character- being able to do something better, rather than the -player- achieving the opportunity to add points to a skill sheet.

Progressing in skill ability "feels" more organic than progressing in levels.

For what it's worth, I don't much enjoy the grind either way, but I would rather have coded progression than have to play a MUSH, which I've tried and loathed. However, having played a few games, each of which handled progression differently, I much prefer the skill-up than the level-up.