Idocreating said:
Diablo 2 has this system. Normal Mode and Hardcore. Normal has nasty penalties for deaths, in hardcore it's game over for that character.
On the plus side, Hardcore is extremely more fun to play if you like playing a more defensive style, which most of the online playerbase isn't. If you have a bunch of buddies to play it with regularly, Hardcore is like playing L4D properly.
Unfortunatly, public games on Hardcore can be hell due to the griefy glitchy nature of some players. I had my Druid get instakilled due to a portal glitch which allowed a guy to do something he shouldn't be able to and one shot me, with a text macro to display an ASCII middle finger in the chat box.
I do hope karma bites him in the arse for that. I really liked that Druid.
The same thing happend to me, exept is wan't a glitch. I had a HC 60+ level Necro, a total bad ass. We had a really big public game going and we were in the section where you fight Diablo. Some noob broke a seal before anyone was ready and 30 extremely tought enemies (due to the number of players) spawned on top of me and I died instantly.
I havn't played Diablo since... That is what permanent character death does.
I do think that you (OP) have a point though. If you die and your last checkpoint/autosave was 5 minutes ago... oh darn, I have to play that 5 minutes over again.
I have just started playing MGS4 (Way late, I know, but they dropped the price so I couldn't resist) and you can easily spend 20-30 min of gaming (not cutscenes, gaming) without a checkpoint. I found this did cause me to play the game differently (for the better). I was way more cautious and thought about every move I made. This is staple for a MGS game, but I think it is the happy medium between permanent character death and checkpoints/savepoints every three steps.