Kit San would say, "It's possible to be too formal, but you can't be too respectful."
I like that quote. We do have a few hard and fast rules of formality where we train, no standing with crossed arms, no hands on hips, when the instructor is teaching, sit in seiza or crosslegged, that sort of thing. But I honestly can't imagine an Aikido class without laughter. Aikido is a joy to me, and to everyone else I train with, That always comes through with smiles and laughter.