Handling Death

In games, that is!

Player characters can almost always die in games.  It's a way to keep the tension up and give them a persistent goal to work towards (don't die).  Different games, though, handle this mechanic in different ways.  Sometimes it's just a slap on the wrist, other times it comes with major consequences.

Dying usually sets you back a certain amount of gameplay.  You get tossed back to your last save, or the last checkpoint, or if you're particularly unlucky, to the main menu.  These consequences can, of course, be a major frustration to the player and cause them to stop playing.  At the same time, they raise the stakes and give the player motivation to keep going.

How do you like your games to handle death?  Minimal consequences?  Or a major hazard?

What about some sort of middle ground?