I'm sure if you asked them, Viacom would probably say that they wouldn't want Nickelodeon running 24 hours a day. Nick is and always has been a children's channel, and there wouldn't be much point in running Nick proper all through the night when its' target audience wouldn't be awake to see it.
(If Nick's ratings have been slipping lately, they don't need to expand their running time, they need to be coming up with better, more creative and diverse programming. Beyond the odd SpongeBob episode, I haven't had any reason nor desire to watch anything on Nick in a good while, though I realize that I'm light years beyond Nick's target demo.)
I do agree, however, that Nick @ Nite doesn't really need to exist on Nick proper as is since it's basically a mirror image of TV Land. If Viacom were to move the N@N programming over to TV Land, here's what I would put in its' place:
I'd keep the Nick @ Nite name; the nighttime block doesn't have to go away just because the programming would change. I'd have N@N start at 9PM and switch back to Nick proper at 7AM, except on weekends when Nick proper would be expanded to end at 10PM when kids wouldn't have to get up early the next morning. As for what this "new" N@N would play, if anybody remembers the former N@N shows On the Television, Mad Movies with the LA Connection and Turkey Television, I would fill N@N with alternative comedies similar to those and possibly mix that with animated shows akin to Liquid Television and Daria and unconventional sitcoms like The New Adventures of Beans Baxter, the FOX live-action version of The Tick and Parker Lewis Can't Lose (heck, while we're at it Viacom could revive their former young adult-skewing game shows like Remote Control and Beat the Geeks on this block as well) as sort of a Comedy Central/Adult Swim lite, and on Friday and/or Saturday nights I'd toss in a Nick Rewind style block of former Nick shows, both live-action and animated during N@N's first 1 or 2 hours. Just rotate the lineup every couple of months to keep viewers interested since there wouldn't be any new episodes coming down the pike.