The reason why Three Rings removed sleep from the game is because it healed knights. But why not bring it back? Here's a balanced version of the Sleep status:

Sleep: Makes knights unresponsive and lowers their defense by 50%. Heals 10% of their health when they awaken. As usual, sleep cannot be cured so a knight must wait until he or she wakes up. Knights will stay asleep even when under attack.

This would make sleep a very deadly status ailment, and wouldn't make the healing overpowered as knights can die easily if they fall asleep, and they gain a small amount of health only when awakening, so farming won't be possible as gaining health would not only take too long, but an enemy's damage can easily outclass the 10% you gain when awakening, especially if a knight is already asleep.

Upon bringing back the Sleep status effect, we should add it as a stratum, and implement many different types of sleep-inflicting enemies. Other than bringing back the deleted sleep-theme levels, we can add new ones, as well as a large variety of sleep-inducing enemies. And finally, here's an example of a new sleep-themed enemy.

Lazy Puppy: A sleep-inducing gun puppy designed by Gremlins for eliminating insomnia, and reducing effort on the battlefield. The Lazy Puppy shoots out blue gloop that explodes when impacting the ground, spreading a cloud of sleep-inducing substances. These Lazy Puppies have limited range, similar to Red Rovers. Lazy Puppies have a sleeping cap on their head, and have a relaxed expression on their "faces".