While I never want to return to the days of XP loss, death in games today is a minor annoyance. LOTRO, for example, has a 10m debuff and increased repair costs (in a game where money is easy to make and you have nothing to spend it on).

I'm not sure what the solution is, but I think it would be cool if death had a wider range of effects. Take a page from Fable and give characters scars after they die. Give us the chance of waking up in a dungeon somewhere far away, or even roasting over a fire as something's meal.