All demeaning thoughts aside, I'll be talking about the Guild Wars 2 armor/repair system. The community is at a disconnect, torn between some disliking the system and others feeling it is a necessary gold sink.
From where I stand, it doesn't really break immersion. Our clothed don't break in our everyday lives, but we aren't necessarily fighting ghosts, centaurs and all other sorts of strange beasts. In Tyria a war against the dragons is raging, and armor won't be magically invulnerable from the beatings dished out by our enemies. From a logical standpoint it makes sense, but it doesn't necessarily make it fun.
I think that some community members are over exaggerating what the costs for repairs will be. Watching some videos the costs seem fairly low in comparison to their income from experiencing the world of Tyria. Gold sinks are inevitable in an MMORPG world, either they give less money to everyone, or allow those who play smart to possibly keep more of their hard-earned copper. If you play strategically and avoid death, you will essentially be saving money. Players who are careless, dying left and right will feel the costs burden down on them a bit more. So instead of just decreasing the money collected and removing gold sinks, they can provide alternatives to those who play the game tactically.
I personally think it will work well, for it makes sense design-wise and gameplay-wise. A perfect system to provide players an afterthought. That death isn't just easily tossed around, there is some penalty to your carelessness. Players need to understand that being defeated is going to come at a cost, albeit fairly small.
Finally I think I'll touch briefly upon the fact of "disappearing armor." It doesn't break immersion for me, if armor is broken and unusable not wearing it makes sense. I mean the Norn don't really wear much clothing anyways, and repairers shouldn't be too far and few between. I'm hoping Dungeons will have repairers inside, as from what I saw there didn't seem to be any. And although emerging victorious from the Ascolonian Catacombs in my Tighty-Whiteys seems like a one in a life time experience, the option to avoid that would be gladly welcomed.