I've thought about this before. Depending on the game, it should obviously vary. For "realistic" games how about something like this:
If you get hit, it hits a certain spot on your body (let's call this game COD7 No One Left to Kill). If it hits your arm, you have to either go in your med. pouch, or scrape one off the enemy in order to find a bandage or something. You have to apply it yourself if you want to stop the bleeding. If you don't, then your health ever so slowly drains. If there happens to be a medic around, he can do a field repair on you (taking out the bullet, bandaging) which will prevent you from losing anymore health.
If you get hit square in the chest, face, neck, groin, you die.(lots of arteries around the groin area)
You can get shots of morphine that won't impact your ability to shoot, move etc. If you don't get something though, then you slowly die. Make it real. Most people don't live through battles where you're fighting hundreds of people.
Most people would cry about going into COD5 with this sort of system. Make the story one long campaign where you don't get warped from location to location with each level. Just keep the missions going. Your squad slowly dwindles if you suck and can't kill the enemy. You can take "breaks" and heal up your squad after you've killed those around you. The game doesn't have to have a trigger being pulled every second. I'd love to see a jungle *veitnam* style game that involved patrolling and finding people in the bushes. Real patrolling, not walking along a set path with enemies at predetermined spots.
That should cover most of the idea...