I really like this topic. I discussed my feelings about it, and how I'm addressing it in the adventure game that I'm developing
here and in the sequel to that blog post
here.
Bottom line, I think that allowing the player's character to die helps create a connection between the player and character. However, if you simply force the player to revert to their last save, you're punishing players who don't save frequently more than other players who save every two minutes, which seems unfair since frequent saving doesn't necessarily represent skillful gameplay. (Though obviously not-dying represents skillful gameplay, so maybe my argument is unnecessary!
)
