Of course, death in real life is a lot more permanent than that of an MMO -- but dying still carries consequences, ranging from losing your hard-won equipment to a slightly longer delay before your next level. On the one hand, harsher penalties make cheating death that much more satisfying, and they help encourage teamwork and community in hopes of avoiding that fate. On the other hand, you are going to get hit by those harsh penalties sooner or later, and it makes experimentation much less feasible when you're constantly on guard for death.
Where do you prefer a game's death penalty? Do you want to cautiously avoid falling, or would you rather get hit with a slap on the wrist so you can get back in the game quickly?