Quite honestly Pleo's don't need to sleep at all, they are robots after all. The sleep position is a concern because it puts the Pleo into a position which stretches the rubber along the neck and tail. Short term this is not an issue but over the long term this leads to cracks in the paint and skin. If left for long enough in the sleep position large holes develop.
However, you must turn your Pleo RB of normally, let them go into the sleep position, then turn them back on and pull the battery out since the data from that play session is saved when the Pleo is turned off. When the battery is just pulled out the Pleo loses the data from that session. Just like on a computer how you must save a document before you shut the program down.
The sleep position however is NOT responsible for the under arm/leg holes that we are seeing. This is caused by the loose skin under the legs and arms sticking to itself during play, over time the process of sticking then being pulled apart again leads to the deterioration of the rubber.