It's a fair point - on the few occasions I've worn my watch while sleeping, I've put it in Airplane mode and turned off 'raise to wake'
A) I want the battery to last until then morning and B) I'm a light sleeper and the glare of an OLED display in my face at night could wake me up.
Obviously if you're leaving it on a nightstand then it can all be left on, and there's never any need to turn off Bluetooth on your phone.
I leave it on, but I also have a charging stand on my night stand and before bed I put my watch on it and plug my phone in. I do this nightly regardless of what the battery is at at the time. Every morning I wake to devices that I use daily all rested and recharged ready to go.
I used to do sleep tracking with jawbone up, tried with AW but didn't find any of the apps to do a great job with it. At this point w/o using another brand fitness/sleep tracker I would say sleep cycle (on iPhone) does the best job. I would recommend giving it a try for a few nights and just charge your watch while your sleeping.
I turn it off in case my phone and my ipad develop self awareness while I am sleeping and use BT to communicate with one another and plot against me. @Julien I just bought one of those hats off ebay. Got a special version for $1K that includes BT & WiFi protection. #SkyNetIsReal people.