So, in essence, there is no contrasting of vowel lengths for I and U in spoken Bengali.
Exactly. Not only in i and u, but in all 7 basic Bengali vowel sounds: অ(ɔ), আ(a), ই(i), উ(u), এ(e), ও(o), অ্যা(æ), and their nasal counterparts. As I said before, when they occur in a single syllable stressed word, they are somewhat longer in pronunciation than otherwise.
So, you would say niil aakaash in the first case and nilaakaash in the second case?
Well, basically yes, though keeping in mind that "aa" is not long in Bengali - in fact, I prefer to write simply "a". In "nilakash", all the vowels have approximately the same length, similar to Hindi (and probably Tamil) short vowels. In "nil akash" (or, "niil akash" if you please), the first vowel (i) is somewhat longer than the others (a's).
Pronunciation seems to be really the issue here. There are a lot of nuances to Bengali. All the more fun, I would say.
Of course, every language is full of nuances - phonetic or otherwise. That is why it is so hard to sound like a native speaker of a foreign language. But, I agree, it's fun.
Regarding the pronunciation of হ্রস্ব. The ব is simply silent then?
Well, almost. The "b" is not pronounced itself, but it geminates the previous consonant. So, it is "hrɔ
sso" (I also prefer to write "s" instead of "sh", because it looks nicer, though it is obviously closer to English "sh" in pronunciation).
I believe this writing is a holdover from the sanskrit word hrasva.
Certainly, it is.
Bengali has no va sound. It has a letter for it (ৱ), but I presume this is only for Sanskrit.
The letter ৱ is actually Assamese. Average Bengalis won't recognize it, or will probably take it for a funky-looking র. It is not used in normal Sanskrit texts printed in Bengali script either, where both "v" and "b" are represented by the same letter - ব. I think, I have seen it in some English to Bengali dictionary for writing the pronunciation of English "w", though. But it is a very rare practice. I personally use the Assamese letter for "r", ৰ, in my Sanskrit scribblings to stand for "b", keeping "ব" only for "v". I am crazy, I guess.
However, where this is found in a conjunct such as শ্ব, the ব simply remains silent. I think this is what you are saying.
It actually represents a geminate, but when at the beginning of a word (or conjuncted with another consonant), where Bengali does not allow geminates, the b is simply silent. Take for example:
স্বত্ব (sɔtto) = right to ownership, copyright, etc. (remember, s is to be pronounced like English "sh"). The first b is simply dropped, because "ss" would not be allowed at the beginning of a word, but the second b geminates the "t" to "tt".
There is another word pronounced exactly the same (sɔtto): সত্ত্ব, which - obviously - is the Bengali version of Sanskrit sattva(-guṇa).
As you can imagine, native Bengalis often have a hard time spelling these words, as the standard demands them to be spelt the Sanskrit way.
Oh, and to make things more complicated (or interesting), sometimes the "b" is actually pronounced, especially in "mb". So, we have অম্বর (ɔmbɔr), অম্বিকা (ombika), etc.
Also, on the resources side, it is hard to source for Bengali materials. I have been relying on some old books and the few online websites that teach Bengali. I have actually even turned to Wikipedia of all places for resources. They are honestly quite basic and will not really help progress to more advanced stages. If you can recommend some, I can continue learning the language better.
Yes, I know, it's not the best situation out there. You can get Dimock's rather old but still useful book online:
http://dsal.uchicago.edu/digbooks/dig_toc.html?BOOKID=PK1663.D6_1976
Radice's "Teach Yourself Bengali" seems to be the only decent and up-to-date book for self-learners out there - at least in English. It seems to be available on both Amazon India and Flipkart along with audio.