There needs to be some sort of punishment for dying, I think it's fine. Besides, ghost form is pimp.
Punishment, yes. Breaking everything in your inventory, no. I was fine with the old exp loss of 5% of your level, but it sucks once it starts costing you money.
I prefer to work around the problem by knowing what the shit I'm doing and not Ramboing into a group of 5 monsters my level.