Experience points in my opinion has always been a very artificial system within RPGs especially when used in a leveling system. How is it that a character can suddenly jump in power after defeating a certain amount of enemies? Skills are learned over time and muscle memory may take even longer so there is no grounding for this in reality. This is less artificial when a human game master determines the amount of experience gained and what action or achievement awards those experience points, but thus far CRPGs are not doing the best job at that. Yes it is true that experience levels work as a game dynamic as is evident with the millions of people playing WoW, but there must a more natural way that still maintains a good game dynamic and reward system. Thus I would like some suggestion on this and examples from games that do this well because I'm planning to start developing my own little RPG soon.

EVE Online takes a different approach where skills are learned in real-time, even when a player is inactive/logged out. In essence, your experience are your Skill Points (SP), and as you learn a new skill, these increase with time. Harder/more advanced skills take longer to learn.
There are advantages and disadvantages to the system, but it certainly wouldn't work in a single player game.

Well lots of games have adapted more realistic experience models, such as the elder scrolls games in my opinion

True that the Elder Scrolls games try a little harder but they suffer from another problem where you can stand in the Market District all day mixing vegetables and become a master alchemist. They also have the leveling dynamic where your abilities suddenly jump (well after taking a nap), which is the initial concern that I had with experience levels. I'm not even sure if things like strength and intelligence should be able to change much without magical or other intervention. Also on the topic of skills - What about skills not being used anymore should they lose points?

Grinding sucks but if they maded leveling up so easy, it wouldnt be fun (GW)

Grand Theft Auto: San Andreas seems to fit what you want.  Your skills and body build depended on what you did and didn't do in the game.

EX points are not bad

"EVE Online takes a different approach where skills are learned in real-time, even when a player is inactive/logged out. In essence, your experience are your Skill Points (SP), and as you learn a new skill, these increase with time. Harder/more advanced skills take longer to learn.
There are advantages and disadvantages to the system, but it certainly wouldn't work in a single player game.
"
I love the EVE online approach.  It basically gives the people that don't play 24/7 the ability to keep up if they're attentive enough to their skill training.  The only bad part is the concept of skills that take 30+ days.  I'm just impatient but usually these skills are worth the training time.

Even though Fallout(1 and 2) does have levels and experience points, the attribute selection is like you said, you choose your attributes at the beginning of the game, and you have them until the end.  Everything is scaled 1-10, 1 being horrible and crippling, 10 being amazing, default is 5.

I agree that experience points seem very archiac and "gamey" to me. I much rather have skills that increase over time through use like in Crackdown - Use the ability and it goes up. Simple and more natural than a level system.

The exact opposite is Final Fantasy. Those games have crazy rules, classes/jobs, hidden stats... it's a mess and no fun for me.

But those crazy systems of the Final Fantasy games add to the fun in my opinion because they work as game dynamics. Thus the dilemma remains. Is it better to have something more natural that may be more immersive or should games favor experience systems that have better game play possibilities or are more addictive?

If anyone played FFIII then they know that grinding for a day or two is mandatory. 

HERE'S AN IDEA: Literally gaining expirience in a game.

Most fighting games or sports games give you everything on day one. Like in Soul Calibur, Tekken or Street Fighter- They cut out the points all together and just give the player access to all the moves from the beginning. Then it's up to the player to learn them all by playing alot and getting some expirience with the game. So instead of artificially giving you a level number, you genuinely get better at it the more you play.

So I think the alternative to Experience Points has allways been around if you look outside of Japanese fantasy role-playin-games. It's the art of making a game "easy to learn, difficult to master", and you don't level grinding for that.