I don't believe humanity or any civilization could survive. It's pure hedonism, really. How does reproduction even occur? And if everyone in the first world is plugged in, what keeps a third world nation from just taking everything? Or killing off the power grid? It would take a massive scale of agreement to even allow that to work.
Outside of that, I am a big believer in, well I don't know the name for it. But you must experience sadness to feel happy. And bad times to realize good times. Anyone in a virtual world would likely never choose scenarios that cause such things. So there'd be no real true joy in this virtual life. Life is fleeting.
From a health standpoint, I don't believe a human body could exist long in a pure virtual world(thinking of something like, The Matrix). Still people tend to get disease, blood clots, stroke, and more. And bones and muscle too weak to even walk when the grid goes down. Am I thinking about the scenario wrong?
Sorry I don't have all(or any) of the answers to that question, mostly just rambling, but the thought makes me really sad.