Total cover or total concealment usually (but not always; see Special, below) obviates the need for a Hide check, since nothing can see you anyway.
Actually he does not need to make hide checks. And yes, anything directed at him will have a 50% miss chance, and no AoO's or sneak attack.
Hence why shadow creatures with Darkstalker are so impossible to find without something like Mindsight or Lifesense.
However, he still might be making noise, so a good listen check can pinpoint which square he is in. If you beat his move silent check by 20 or more, you can figure out his square.
Holy crap, I'd never realized the power of that ability. The closest one to it I had ever used was with Dark Ones (Fiend Folio), but that was a 40% miss chance, so you could still target them. That's one amazing "unintended" consequence of "simplifying" the cover and concealment rules in 3.5...
So, even after attacking, the quasits will not be able to be pinpointed to a square by the PC's.... wow.
Even though it's not what the rules allow, I'll probably allow each attacked PC a spot check vs the attacking quasit's hide check after each turn the quasit attacks. I won't be imposing the -20 to hide though (a la the sniping rules). Average hide check by the quasit is a 26; the PC would have to get a 46 (on average) to pinpoint the square the quasit is in.
Wow, 9 of these things in a gestalt EL 9 encounter for my 9th level party... They are going to hate me.
On the bright side, each advanced (4 HD) shadow creature quasit only has 10 hit points... (and fast healing 2, Cold resist 9, Fire resist 10, evasion...)
Edit: Though, this rule from invisibility helps:
If an invisible creature strikes a character, the character struck still knows the location of the creature that struck him (until, of course, the invisible creature moves). The only exception is if the invisible creature has a reach greater than 5 feet. In this case, the struck character knows the general location of the creature but has not pinpointed the exact location.
So, unless the quasits are smart and 5-foot-stepping (though they'll have to usually use those to enter a PC's square), the PC's will know after each attack that the quasit is in the PC's square with him. That makes it much more manageable. Of course, if a PC enters a quasit's square (since the PC can't see it), then the quasit could attack and move away (not provoking an AoO). And pretty much if the PC's move at all, they'll provoke from the quasits, since they can't see where they are.