"Permadeath" is almost a taboo word on the gaming industry, but it's almost a need in having a immersive Virtual World. I wrote about it a couple of days ago, saying:
Death is death. If you died, you're dead. Dead. You shouldn't "respawn", you shouldn't turn into a ghost. Most critics on MMOG's are on the fact that they are "excessively violent". Well, if death meant death in a virtual world, players wouldn't be killing each other (at least not that much). On the other hand, if in real life when someone dies he respawns in another place, people would be killing themselves all the time.

Now that known MMO's are getting in the wild, with both the number of MMO's and number of MMO players growing, the issue is getting hot again - people start to be sick to see "yet another hack'n'slash MMO game", specially when the differences are only names, graphics and, with luck, the background story. The Guardian has a piece exactly on this issue: "Why do we have to die in games?" formulates an answer: no, we don't. Let me quote a little bit (but you really should read the whole article):
But do you need to die at all? Eric Zimmerman, a New York-based game designer who helps run the studio Gamelab, says: "Dying in games is a strange artifact of certain kinds of historical forms and content, and there is no good reason for including it in many cases." Molyneux concurs: "If we were starting from scratch, we wouldn't come up with this paradigm."

The only thing I have to add to explain my point on permadeath, is to give a footnote on a previous affirmation I did. When i said that:
I also agree that if you're paying to play a hack'n'slash game like World of Warcraft, you have to have the ability to respawn after death, but I'm not talking about building another WoW-like world, I'm talking about building a real good, new and innovative Virtual World.

this doesn't meen that hack'n'slash games can't have permadeath, or that they shouldn't have it. That sentence is meant to say that "the hack'n'slash trend we see is hugely flawed in it's concept". See, if you take into consideration that those MMORPG's are just varients of MUDs, heavilly inspired in D&D, you'll have to ask yourself: "Why is death permanent in D&D and not in a MMORPG?"