Gamasutra - Against the Death Penalty
One of the Gamasutra hosted blogs has a piece on death in games. The author explores different fail states and the potential narrative benefits and clearly likes alternative ideas to the "game over" screen. An RPG related snip:
During Fable 2’s development, Peter Moore similarly removed the death penalty against the player. Instead the player’s character would become more scarred and disfigured the more damage they endured. This produced two curious responses. In the first camp, players willingly let their character suffer in order to produce the most deformed and mutilated badass possible. The second group simply reset their console: they forced their own death penalty. Old habits die never, apparently.
In Fallout 3 certain characters integral to the main story thread cannot be killed only knocked unconscious. Why the game doesn't afford the player this courtesy is a real missed opportunity. The possibilities of regaining consciousness in an unfamiliar location, like one of the many prisoner caravans, or having been looted and taken hostage by super mutants would have presented even more opportunites for interesting and dynamic storytelling.