If Loop Quantum Gravity is correct then spacetime itself plays an active role in the physics of the Universe (a so-called background independent theory).
String Theory, as I am led to believe, on the other hand "happens" in spacetime. Space and time are merely the setting where all the interactions take place.
I don't pretend to know much more about either theory, but
wikipedia has some more info on LQG.
It seems to me that any theory of the Universe also needs to be background independent, as you have to be able to explain the existence of the arena in which it all happens (as opposed to the non-existent indolent "void").
I don't understand the problem with time - of course its real - its a parameter we use to help us define the world around us. No different from mass, charge, colour, spin, momentum etc
PE
edit: missed an important "in"
[This message has been edited by Primordial Egg, 03-25-2004]
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