1. A LED notification light blinking all night would not use up the battery in anyway to make a difference in battery consumption. Blackberry's and other phones have this feature with no adverse affects to battery life or usage.
2. If there is an "OPTION" to turn on / off this notification light, both people that want and not want this feature would be happy.
3. There is a thread about someone who mentioned having the home button blink for notification which I think it s brilliant idea.
coming from a simple phone like the Palm Pre, I am amazed at how primitive the notification system is in the iPhone. The home button blinking has been on WebOS for two years. You can set each email account to notify independently with an LED or not, you can even set different blinking codes for text vs mail....the iPhone is a great phone that does lots of great things, but the notification system is downright primitive.