Having ridden the 'nachtzugs' frequently in Germany, Austria, Switzerland, Netherlands, Czech Republic over the past 13 years, I can attest to the convenience, time/cost factor, and comfort of same.
While the '6er' couchette or liegewagen configuration is a bit much for most American travelers, it is quite popular with European young people and families. I prefer the '4er' which is the same basic 'bunk' configuration but 2 + 2 configuration, and at only about $25-35 upcharge over your rail pass, quite a bargain. You DO sleep in your clothes with other travelers, but I have never had anything but a pleasurable experience. I find that most main train stations have very clean and modern 'wash rooms' where you can freshen up, shave, and even take a shower in complete privacy and comfort. So, 'getting ready for the next day' has never been a problem.
The 1st class cars offer everything from a single BR up to Deluxe (very expensive) which is similar to our Deluxe rooms on Amtrak, though many of the cars are duplex (up/down) configurations.
All in all, night train travel in most of Europe has an accomodation for every budget and/or comfort level. Very efficient timetables and basically you can leave from about 11pm any major city, arrive 7am-10am any other major city. Exceptions of course, would be going from say Lisbon to BudaPest, which is more than just an overnight trip.