I like both styles...it really depends on the game more than anything else, IMO. Some types of games, the way they're made, real-time wouldn't work very well. Or at least, the options during combat (and, I'd assume, in level/combat design) would be decreased quite a bit because you don't have that pause-time to decide what to use. Some people find the lack of options annoying, some don't.
My experience with real-time (no pausing) combat in action/action-RPG's is that ultimately, I'd end up using just three or six or eight out of a hundred 'attacks' because it was too much hassle to keep switching all the time, every time I left an area of one monster/situation for another. Either that, or the game gave you 20 slots of 8 choices each and you'd go batty trying to configure a hotkey combo for every situation...and then remember which one had what combo on it and what key to push to get to that slot. Not all gamers have the reflexes or memories of The One.
Anyway, I like both...just depends. Because Kotor didn't have a real-time feel to it in the first place, with all the dialogue/cut-scene interruptions, many of them out of my control, the turnbased combat just felt like an extension of that same concept/playstyle. Same thing with BG etc.
Morrowind did have a nice real-time combat system...so did Nox, for that matter...too bad neither game had much longevity/replay, to me.
P.S. I remember some areas/levels in Might & Magic RPG series that would have been nigh impossible real-time.