LordHavoc was raving the other day about how Prey doesn't make you lose progress in the game upon death, because you respawn back in place you died.
Having not played Prey, I can't really discuss the effects of this on the gameplay, but to me personally think this is anathema to the traditional ideas of negative re-inforcement for doing "the wrong thing".
Clearly games need a wrong way and a right way to play them. If you stack too high in tetris, you're clearly disadvantaged in the time you have to react and may eventually lose the game, ending play. In first person shooters, death often resets you to the beginning of the level, thus you need to be careful not to die. (Quick Saves can be used to avoid this, but the average player will most likely not bother). RPGs often penalize stats, take away gold or items, or teleport the player far from where he died.
In a deathmatch, all your weapons are taken away and may be given to the person who killed you. I dunno, just something to think about.