The south yarra and prahran distrcits in Melbourne have clubs which are open 24/7 some days of the week. They have had their problems, the most notable occuring in the Salt nightclub which was subsequently closed. The biggest problem in the area to my knowledge was that the traffic on Chapel St slows to a quite literal crawl on Saturday nights as it becomes the place to be for anybody who wants to show off their newly lowered and hotted up *insert flashy looking car with neon lights here* car. Police seem to have addressed the problem fairly well by increasing their presence and randomly diverting traffic off the main road and around back streets issuing defective notices to drivers of any car which is too low, loud, etc.
Other areas suffering similar issues with late or all night licences over the past few years have been St. Kilda and Brunswick.
It seems the previously trendy cafe, restuarant, and latte strips have also become the place to be for late night/day clubs. As far as I'm aware, the clubs have won on almost all occassions. I don't live in any of the areas so can't comment on what residents think, but property prices haven't suffered in those areas and rentals appear to be in high demand. That makes me think it's still a place people want to live.
I guess it comes down to the type of crowd attracted to the areas are and how effective the police presence is. I have no problem feeling safe walking alone in any of the areas mentioned any time of the night. On the other hand, I'd walk through Frankston with great trepidation after midnight given the number of booze fuelled brawls I've seen among large numbers of people down there.