When are your liquid rockets running out of fuel? On my escape velocity capable craft, the liquid rockets exhaust their fuel supply at about 250,000 meters, at which point escape velocity has been reached.
I only had one relatively small liquid rocket for the final stage, the rest was all boosters. The liquid one burns out at about 90,000m in ideal control conditions, but the momentum is sufficient to carry the command module onwards.
It was only a testing rocket, I'm surprised it was able to get as far into space as it did. I'm planning on building one that still has thrust power in space, perhaps even enough to achieve escape velocity and turn around for a return.
I've seen one guy in a stable orbit for six real time hours.

Nice one! Quite a view, isn't it?

It is pretty awesome. I think I'm like you in this regard, I've always wanted a game where you could leave the planet and return in a spaceship, especially one like this, where the feeling of escaping gravity and seeing the edge of space appear is done so well, you feel like you're actually up there. I've been thinking about it all day, it's rare that any game can do that to me any more, especially an indie game that's still in alpha.
I wonder if it's possible to build a shuttle-like space plane, slow down for a winged landing. It seems unlikely, as most parts apart from the command module seem to explode automatically on the ground, regardless of how fast they're travelling.
Also, are there any cities on Kerbal? Or is the entire population engaged in the space program?