I've actually tried the Uberman sleep schedule for three weeks. This is where you sleep 20 minutes for each 4 hours, totalling in a whopping 2 hours sleep each day.
The time gain was insane, and the transition period aswell (between day 3-5 I actually hallucinated due to sleep deprevation). But around 1.5 weeks something strange happened. The 20 minute period that you are allowed to sleep seemed like hours each time, and I would wake up like clockwork on the 20 minute mark.
The whole routine is not just a sleep routine, it affects your entire lifestyle. No stimulants, including sugar, high degrees of fat, caffeine. No sedatives, alcohol, drugs (!). And the fact that you are awake during the night when the whole world seems dead is one of the hardest social aspects to handle. What do you do with 6 extra hours each day?
Of course there's the aspect of finding somewhere to sleep every 4 hours (was at school at the time), and if you ever missed out, you would have hell to pay.
I eventually buckled on a skiing trip with an open bar, had a nice weekend and decided to going back to normal sleeping patterns. Partly because it was not socially acceptable to sleep 2 hours a day (my father threatened to beat some sense into me). But also that there was very little foundation that this kind of sleep pattern was even safe. A couple of million years of evolution had other idea's of when and how long it is necessary to sleep.
Other than that, the foundations that I gathered up from this was that when changing your sleeping pattern. The body frantically tries to adapt. By sleeping extremely short periods the body would effectively increase the amount of REM sleep (and yes, I dreamed a lot during these sleeping periods), however, it has not been proven that you don't need the other types of sleep.
This is probably a lot of rumours, and a lot of wishful thinking. I personally wish there was some solid backing behind this kind of reasoning (more time awake is awesome!), There are a lot of buzz out there (check google and youtube), but I've been unable to find anything reasonably solid.