I'm not sure dying permanently is more significant than an xp penalty or whatever they come up with, since it just means you'll reload.
Permanent death, imho, is only more significant in a party-based game (like Baldur's Gate) since then you have the choice to go ahead despite having lost one of your party members. I wish Dragon Age had it, it would have made the combat more interesting if you had to try to keep all your characters alive instead of just one.
For solo RPGs, though, I don't really see the difference between reloading and respawning.

Unless... you can't reload!

You don't have to reload. Hell, if you die just destroy the disc or delete the game,or just stub yourself, talking about HARDCORE TO THE XTREEEEMEEEEEEEEEEE

That's exactly what I thought going into Demon's Souls. The thing about the game is that it is very possible NOT to die during a level. But all it takes is one slip up, one second of mental lapse to do something to that will screw you, like falling off a ledge, not properly blocking a hit, etc. It really only takes 1-2 shots from almost anything to kill you, and Boss attacks tend to be difficult to avoid and mostly one shot kill you. If you take things slowly, carefully, you can get through most of a missions without dying, hopefully triggering some shortcuts for the second time through. But there are some bosses that just are freaking hard to kill (I'm looking at you Tower of Latria level 2 double teaming m$%#$@f%$##$@!). I love the combat system, it requires some thought, and most of the time when you die its your own fault for not being careful enough.

I LOVE Demon's Souls. I really, really love the game. I love the above stated fact that one single slip-up can cost you many thousands of souls. I love everything about it.
...Then I hit stage 5-2.
I can barely keep playing and I've actually taken a break from the game because that part is just too emotionally taxing for me. It just makes me not want to keep playing because the feeling of dread is too overwhelming. Everything just feels "ugh" there. Hopefully I'll man up some day and play through it, because I really do want to hit New Game+ and beyond.

Oh man Demon's Souls, the reason I bought a PS3, was a terrible, terrible, terrible disappointment.

This game is a combination of emotions: complete and utter frustration, and absolute elation.
Never have I played a game so sadistic in scope, and yet never have I played a game so fantastically rewarding when you accomplish tasks. Demon's Souls makes you earn every step you take, quite literally.
It's a hard one to stomach. But once you get a taste of success, you keep coming back. It's rough.

Same thing here, This game actually completely defeated me a few times in the beginning. Lost too many souls and had my weapon break twice where I hadn't the souls to get it fixed so just starting over was easier than the debt it put my character in. All the messages in the bloodstains seem corny now, but when the game was new it just emphasized the horror even more. You didn't just try dodge the bad guys sometimes in that game you really ran the f*ck away!!!