It's a problem.
If you allow dying, players will just want to save every time every 2 minutes to make sure they don't have to reload too far back after they die. Like in Space Quest where dying is common.
Without dying, games can start to get boring. When you can do nothing wrong, you don't really think as much about what you are doing, making the game less serious and hence enjoyable.
It really depends on the game. I think it would be ridiculous not to allow dying in a horror game, and adds the necessary fear to the game, but in a fun game like Day of the Tentacle it's not needed and is better without it.
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