The key to giving your peeps enough rest is to let them sleep overnight without checking on them or bothering them. Most 'real' people sleep many consecutive hours a day. When you keep checking on your peeps, they think you want them to be awake so you can play with them. They'll try to get fitful bouts of resting in, but it won't be enough. Just turn the game off (without pausing) and let them get some rest. It should work wonders after a day or so of that.