Just read "Official Known Issues" and found this:
Well hey, eventually if this is fixed, why not allow sneaking to make you hidden from others as well? It would sure be fun for rogues!During PVP, players with the Invisibility spell cast on them can still be seen by opponent players.
*note: I do not endorse PvP in any way and I could care slightly less for it as I spend about 10 seconds a month in the pit*