Having seen this problem in a number of games, I'd like to write my thoughts on ladders sorted by matchmaking rating, prompted by Petric's thread. I'm not active in FAF anymore so it's more of a general comment and may contain inaccuracies.
In every game I've seen with this system, you get the problem where top players have a disincentive to play. As your rating gets higher, you have to wait longer for fair matches, and if there's a timeout system in place you'll wait a long time and get a low rated opponent anyways because the system gave up. Since you'll mostly be playing against lower rated opponents, you risk losing a lot of rating if you lose, and only gain a small amount of rating if you win. Since there's a chance the opponent is a smurf / not rated correctly / is lucky that day, that makes it very risky to queue as a top player, and further incentivises smurfing.
I think the most successful ladder systems have a small element of "incentive to play more matches". Sure, it sucks and breaks the connection between ladder placement and skill if "playing more matches" is a factor, but as long as playing many matches only has a small effect on your placement, I think it's an important element to making a ladder popular.
What do I mean, exactly? Well, usually this is some sort of league system where you gain points for every win, lose points for every loss, and everyone is in a race to accumulate as many points as possible before the end of the season, where the points are reset. The amount of points won/lost and its relationship to your matchmaking rating needs to be carefully thought out, to properly reward skill vs. playing many matches.
Another part of the problem is matchmaking. Personally I don't like matchmaking heavily based on rating, because it encourages the mindset that the matchmaker influences what opponents you get, and thus your chances of winning or losing. I think broadly splitting up the ladder into divisions, and then allowing anyone in a division to match with anyone else in the same division, is a far more transparent system. For a ladder with only a small number of players like FAF, possibly only two or three divisions are needed right now. (Good / Intermediate / New+Bad.)\
Anyways, since we've all played different games in the past, comments or opinions on this issue are welcome.