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That is what I thought John - what I would call user documentation, Moodle docs +

(The shift in discussion focus is probably my fault. Or, more specifically, I see a resource-light Moodle as a good approach to newbie Moodle. Much of it is, from me, just thinking out loud.)

I'm no UI expert and my ideas about interface design are certainly skewed. John, I see what you mean but I have a different perspective on this.
As a user, I feel that some simple yet powerful interfaces are often the most efficient way to get users to learn how to use a tool. Since Moodle is meant for learning and since it's based on constructivist ideas, there's something fitting about making "learning Moodle" a "Moodle-style learning experience." Maybe I'm not expressing this clearly (I have a cold) but it all makes sense in my mind.
The key to simplified interfaces isn't to just hide features but to make sure that the ease of accessing features somehow corresponds to the importance these features may have for differently experienced users. Hard not to think about "learning curves" here but the better analogy probably has to do with step-by-step learning, walk before you run.
Not to sound like an Apple fanboy but I can think of several examples in Apple products through which a simplified design makes a lot of complexity non-problematic.The features which newbie users are most likely to use are painfully obvious at first sight. It's only a matter of time before some of the slightly more involved features become very apparent. Really "geeky" features may never become really apparent to many users as they won't need it. Still, they are (or at least, should be) well-documented so that the curious user can find them if she feels the need for them.
Another way to put it is that the interface itself could do some of the job of documenting. "Welcome to Moodle. Here are building blocks to play with."
As it stands, the documentation is already a bit much, for the casual user. The Moodle community certainly needs to make sure the documentation is appropriate, clear, and current as possible. But I'm trying to think about "hand-holding" methods. My university does have short PDF files to make it easy for Moodle newbies: Instructor documentation and Student documentation. As these things go, those files are decent enough. But I'm quite sure very few people have even read them.
Straightforward textual documentation is extremely useful when you know about some feature and want to make it work. Walkthroughs, tours, and tutorials (as presentations with some interactivity) can be quite useful as ways to present features to people who know what they want to do. But many Moodle users (thinking about teachers again) are in the dark as to some very basic ideas about what Moodle is and what it can do.
My hunch is that some kind of simplified Moodle installation that they can fully control themselves and import into a larger Moodle installation would make a lot of sense. Yes, "Moodle on a stick." But with an emphasis on hands-on self-training (and, possibly, collaborative learning among colleagues!). With model courses to play with and adapt. And complete documentation. Possibly with dummy users, to see how well the system functions. In a safe environment. As something to work on during a break.
I can just see it. And it could be quite reassuring.

John wrote:
>>I worry about interfaces that try to hide inherent complexity because I haven't seen it done successfully.

Take a look at the Moodle Quiz Module. It has an excellent system for hiding complexity--called the Advanced Features button. As admin, I make the default settings and put them in "Advanced Settings". Then I train the teachers to configure the other 50% of the settings. We really love it. Less stress on the newbies and full flexibiltity for me or other adventuresome teachers. I would like to see Moodle do the same for other modules.

We have invested lots of time in printed manuals for Moodle in Germany. In the moment we are updating an admin manual for 1.9. (120 pages)
The teacher manual (160 pages) is now published in the third corrected and updated version (an english translation will be published end of November), a student manual (60 pages) is in the third edition. Addison-Wesley updated the German Moodle Praxisbook (600 pages) after twelve months. They sold all the books from the first edition after 11 months.
Half a year ago we published a learning DVD with 6,5 hours of small units (3 to 10 minutes) about most of the topics normally used.

We know that there are lots of users that say, we don't need more than help files or a wiki system. But we also heard, we need printed manuals. We have different types of users and different needs.
Lets do one thing and the other. There is not only one way.

Thanks Martin, that is pretty inspirational.

So non-developers like me could answer questions by linking to docs, and extending/ improving documentation as appropriate.

I enjoyed the link to Spolsky, his ideas are great, here is a lovely KathySierra post, with tips on sketchesand ‘rough’ mockups. In this chapter, Spolsky also talked about ‘imaginary users’ and I wondered if a gallery of these might be useful for developers – we could come up with an interesting range in the Lounge I am sure.

I take you point in the last sentence that each of us should get on with doing what we can before asking others to do something for us, butI feel sure that there must be some dialogue here that can be useful.

we need more...
Could not have said it better. A showcase of various applications of the Moodle tools will not only teach people how to create quizzes, forums, etc, but will show diverse ways in which you can use these to achieve completely different outcomes, bringing more teaching experiences into your courses so that has to be good for students.