Stretch can be good or bad depending on perspective.
If you've just missed a hold while climbing, or vanished down a crevasse, the stretch in the rope is what turns a gut wrenching jolt of a stop into a much more pleasant deceleration.
Of course, not many of us are going to be leaping into a hammock from a lower branch so that kind of stretch wouldn't give much benefit.
I wonder if something with (effectively) zero stretch, let's say a stout chain, would make for a slightly more uncomfortable night. Having never slept in a hammock I don't know, but I imagine that a certain amount of give in the system would make for a smoother ride.
JoyR - what knots had you used? Not to insult you or anything, but could it be that the knots were securely tied and had slipped along the line somehow?
I expect that once the hammock is fully loaded, the lines around the tree would tighten, the knots would tighten and so on - I dunno if that'd add enough length to drop you bum-to-floor, but I imagine that would lead to some degree of sag, even if not as much as you experienced.
