I was kind of talking about this on another topic, but I figured I should make a separate thread for this.
Anyway, I think most of us agree Lycanthropy and Vampirism needs to be a double edged sword. Because if there are no downsides at all, literally everyone will become a vampire/werewolf just to get the extra bonuses. Plus it would be quite immersion breaking and it would go against the lore too to see a transformed werewolf walking around town.
I'll list my own ideas in the spoiler, but I'm mostly curious about how you guys think they should be handled
Vampires get a bonus to sneak, magicka, damage resistance, and some special skills, but they also have a hunger meter. As they spend time logged into the game this meter slowly decreases and if it hits zero(let's just say it takes two hours), the world will be able to tell they're a vampire. NPC's and other players will be able to attack a blood-starved vampire on sight, but the vampire won't be able to fight back. If the vampire manages to get killed while in the blood starved state, their hunger will be reset and it will be another 2 hours before it reaches zero.
To feed on an NPC a vampire would simply need to initiate dialogue with them and select a hypnotize option, however perhaps they could also feed on recently killed bandits by crouching and clicking on their body.
Werewolves
Werewolves won't get any bonuses in human form, but when they transform into a werewolf they will be a lot more powerful. However, while in werewolf form other players and even NPC's will be able to attack them on sight. Since we don't want werewolves going on killing sprees they won't be able to attack back, meaning they will have to run away.
This will give werewolves incentive to transform away from town and to only use their powers around people that they trust won't kill them. I could see using transformed werewolves in PvP as a possibility, but the team would have to have strict rules against killing werewolves and even then it would be risky.