Relmstein has posted a great analysis of how to do expansions right-- he looks at the history of major MMO expansion releases, and grades their qualities on three criteria: timing of release, cost at retail, and quality of content. In essence, he sets up a quick continuum that proves the old theory: "Good, fast, or cheap. Choose two."
A game like World of Warcraft has released one terriffic quality expansion, but as Relmstein says, it was a long time coming. And Star Wars Galaxies released huge updates one after another, but we all know how well that worked out. Relmstein lists Everquest 2 as the best of all worlds-- they've released expansions fairly often (every 12 months regualrly), at fairly cheap prices (the fact that the original game content comes with every expansion doesn't hurt), and the quality has been done fairly well.
It's an interesting balance. Of course expansion packs aren't an MMO-only phenomenon, but the idea of constantly pushing out new game content is something that lends itself very well to a persistent massively multiplayer world. You'd think that there has to be some rate out there at which players are getting their content too fast, but according to Relmstein, we haven't even reached the ideal rate yet-- it's still taking developers too long to cook up polished expansion content for hungry players.