Well, there is stone skeleton key boss in sunken city, grubb drops wraith statue and it's required for two badges (sunken city and completing all wc quests). Other than that there isn't anything exciting in there.
I'd say that it's worth it. It may be optional but it's free XP+a badge so I'd say that it's worth it. Besides that, it's the only place where you can fight Simon the Sayer at.
Yes! Sunken City is fun and challenging! You might need help if you are alower level wizard, which i did when i did it on my life wizard, bun on my storm, i came back and did it at level 50 just for fun.
Id do it! I like to complete every sidequest/side area for the extra exp. It might not seem like a lot then, but it will add up. Plus you get a pretty cool badge
Of course Sunken City is worth completing. It is indeed very fun and challenging at the same time. You get to gain large amounts of XP (depending on your level) as well as a badge. However, it is always up to you to decide.