Diablo 2 had it were death cost you XP and gold.
Gold was pretty much meh after a certain point, but XP now, that would hurt.
It could never drop you below your current level, but it would slow your progression.
Early on, no big deal, but later on? Losing 25% of your XP for that level, when you need say, 1 mil xp to get to next level?
umf.
I forget the actual % amt, but if you look up the tables on how much you need to level up, you'll see what I mean.
WoW gave a debuff after death for a bit, + damage to your stuff that cost to repair. (no debuff there tho)
The repair bits tho.. "ok, all my stuff is broken, need to to repair" was a common cry.
(no point in xp penalty in wow, as once you hit max level..)
Yes, death should have a penalty, I agree. However, there are times when the game just sneaks up, shoots you in the back of the head, and there is absolutely nothing you can do about it. (hence my aversion to ded is ded)
YMMV of course.