why it is not the custom of Chabad Chasidim to decorate the Succah, as well as to sleep in the Succah.

7 Cheshvan, 5715 [1954]Sholom uBrocho [Peace and Blessing]:

Rabbi... conveyed to me your question as to why it is not the custom of Chabad Chasidim to decorate the Succah, as well as to sleep in the Succah.
This question calls for a lengthier explanation than this letter would permit. However, I trust the following points may suffice:

Re Decorations:

Generally, a Mitzvah [commandment] must be observed on its Divine authority (with Kabolos Ohl) and not on rational grounds, i.e. for any reason or explanation which we may find in it. An exception, to some extent, is the case where the significance of the Mitzvah is indicated in the Torah, and our Sages have connected its fulfillment with it. At any rate, only a qualified person can interpret it more fully.
We have a rule that a Mitzvah should be performed to the best of one's ability, and as the Rambam [Maimonides] explains (at the end of Hilechoth Issurei HaMizbeach). This applies especially to the object of the Mitzvah itself, e.g., a Talis should be the best one can afford, an offering should be the most generous, etc.
Unlike the Sechach [branches covering the top of the Succah] and walls of the Succah, decorations are not an essential part of the Succah, but an external adornment which adds to the enjoyment of the person sitting inside the Succah; they are, as the name clearly indicates, supplementary objects which decorate and beautify the external appearance of the Succah.
The attitude of Chabad Chassidim in this connection, as taught by generations of Chabad leaders and teachers, is that the Succah is to imbue us with certain essential lessons, which are explained in Chassidic literature and Talmudic literature in general. It is expected of Chabad Chassidim that they should be impressed by the essential character of the Succah without recourse to "artificial" make-up; that the frail covering of the Succah and its bare walls, not adorned by external ornaments, rugs or hangings, should more forcibly and directly impress upon the Jew the lessons it is meant to convey.
Re Sleeping in the Succah
In order to safeguard and inspire a greater feeling toward the Succah, sleeping in it is not practiced by us. The basis for this is two-fold: First, we have a rule that Hamitztaer putter min HaSuccah (suffering exempts one from dwelling in the Succah). Secondly, during sleep a person is not in control of himself, and, furthermore, the very act of undressing and dressing, etc. inevitably creates a common-place attitude towards the place which serves as a bedroom. Such a depreciation of attitude toward the Succah (by sleeping in it, as explained above), from what his attitude should properly be towards the Mitzvoth of G-d whereby He has sanctified all Jews, would be deeply felt by the Chabad Chassid by virtue of his Chassidic teachings and upbringing, and would cause him profound spiritual suffering. The combination of these two considerations, therefore, led to the custom not to sleep in the Succah.
However, if a Jew feels absolutely certain that his sleeping in the Succah will not in the slightest affect his attitude toward the sanctity of the Succah, and is consequently free from any mental pain that might be caused thereby, he is duty-bound to sleep in it, in accordance with the fullest meaning of Taishvu K'ain taduru, to make his Succah his dwelling place to the utmost.I hope the above will provide an adequate answer to your question, but should you desire further clarification, do not hesitate to write to me.

With blessing,