Yes, Moonsugar and Skooma are illegal, that's why only evil characters and Khajiits sell them.
And how are people supposed to know your drinking Skooma, hell, in Oblivion it was the same bottle as any other potion.
Effects? What type of effects do you want in a GAME.
Effects? How about like earlier, more in Strength, Endurance and Speed, and less in Agility and Intelligence. Was a way to stimulate a drugged energy. (hard to do without real attributes though)
Also they have the system from Fallout 3, with the chems. They are great consumables, giving more AP, Speed and such. But, they are addictive, and you suffer penalties for not taking for a long time once you get addicted. Why not use something like tthis?
Or simply like EpicFail said above, the Felldew had something like this.
And Skooma is supposed to be a drug, people would at least think it was weird if you ran about hallucinating, maybe even check you.