Well, in Vanguard all of the housing models looked the same and you couldn't affect the outside, so e-peen never went further than "I have a house and you don't". You could allow people to access the interiors though, but most people kept their places locked.
As far as the zones being dull, they were actually located in really nice locations (island chains, mountain tops, along beaches) and clumped in small groups of five or six houses with plenty of space between them. They were pretty as hell, it didn't look cluttered or dull at all.
For GW2, I would love to see a large WvW-sized housing district with individual neighborhoods scattered throughout. Each neighborhood would have something like eight houses, and would work together to improve their overall area. Each house would have a value based on the items within it, the size of the house, etc. Everyone's house value is added together, and the neighborhood gets new features and amenities based on everyone's contribution.
For example, a neighborhood starts off as 10 little mud huts. We all work on our houses, upgrading them to cabins, then large brick houses, and eventually large stone mansions. We upgrade our rough-hewn tables to luxurious teak, fill our homes with trophies and plant trees on the exterior to make them gorgeous. As we do so, our neighborhood reaches reward thresholds which everyone votes on. Some are aesthetic (A well, gazeebos, signs, high walls, etc.), some can be interacted with (fishing ponds, trading post dealers, bankers), some are temporary events (village festivals, etc.). Decorating for holidays gives us points and unlocks special holiday events.
Hell, housing could even be semi-competitive, with awards and achievements for being the best neighborhood in your area.