1 - Yes, it looks quite ugly. It's something you would expect to find inside the engine bay of a hot rod or custom tuned import, not a museum showpiece like a Ducati 1098.
2 - Moisture, dirt and debris, can get in between the wrapping and the exhaust, and increases the risk of exhaust deterioration / rust.
3 - If the wrapping ever gets loose while you're ridding, you run the risk of it wrapping itself around your chain, rear wheel, or rear set, and the results could be devastating.
4 - Your exhaust gets hotter in certain areas, and those areas will begin to discolor due to the fact the wrap is retaining the heat. If you ever decide to take the wrapping off, you'll have pipes of different colors / spots.
5 - Unless you have no choice, and no ability to do so, you should always allow your exhaust system to have as much free air circulation as possible. If you retain its heat, it will undoubtedly transfer its way back to the heads, and we all know, that's a major no no when it comes to the world of producing power. The cooler and denser we can keep things running, the more power we can build.