I believe the biggest issue with character sheets as we know them is the personality section. As it's presented, it's simply too broad to actually get an idea of what to fill it with. For example, think of anyone you are close with in meatspace. Try and explain their very nuanced personality in one paragraph. I guarantee you'll leave something out.

I believe this can be addressed by working out a way to either specify what information is needed, or boil it down to one sentence.
   Specifying what information is needed would require a great deal of commitment from the GM, as they'd have to analyse which parts of a person's personality are actually relevant to the rp. My personal favourite is "Core Drive", which is filled out with one word that informs the reader of what the character values most. Money, power, family, style. After you have this requested,  it becomes easier to build what other info you need, based off of the drive: inner conflict, goals, accomplishments, moral objections, their "line". Overall, this can all add up to the clutter problem mentioned previously in the thread.
   The other way of going about specifying personality I see is to ask for one or two sentences that boil everything down. This should then be used as a guideline, rather than a hard and fast rule. My personal favourite is from the Mouse Guard RPG: belief and instinct. Belief is one sentence that summarises how the character views the world, and instinct is an action that must be performed after a trigger.
   For example, I once made a character who believed that "Violence is a last resort, as it is the first sign of desperation", and they instinctively fled the area whenever there was trouble. In general, the character was quite valuable due to their non combat skills such as medicine, tracking, and wilderness survival. However whenever there was combat, they'd flee and hide, then shame the others for defending them. (Obviously they didn't like this, but they couldn't do anything about it because if they got rid if the character, they'd starve or get hopelessly lost or something like that :lol)

Overall, I do think that character sheets are necessary,  but I think the form they are currently in needs to pass out of use. It encourages checklist characters, rather than characters with well thought out motives and beliefs.