The point is to ask ourselves: do we want to continue a game where the fiction contains raise dead, or do we want some mechanism/consequence that fits better in the genre?
Well there are some mechanical considerations to dead as a binary option and more complicated wounding mechanics.

While complicated wounding mechanics do model things more realistically, they also have a tendency to be a form of escalating suck. Sure, it's not quite realistic to go down 40HP to 2 HP and be fighting at full strength and then suddenly dead 2 HP later, but at the same time, in a lot of systems where wounds decrease your fighting capability, that just leads to higher lethality. For example, combat in Traveller depletes your stats, which in turn affects your fighting capacity, and your ability to heal. Consequently combat in traveller is much like combat in real life, you avoid it unless there's no alternative. Also, you can die after the combat simply because your wounds are so grevious that you can't heal naturally.

Ultimately, I think dead as binary and decreasing capabilities actually result in the same basic thing. Above a certain point, you're contributing to the battle, and below a certain point, you're not, whether thats because you're dead, unconscious or just unable to hit anything effectively, either way you're out of the battle.

If you look at death as a tool for sinking party resources, then I think you'll find that low lethality / less binary death systems consume more party resources during battle (and usually renewable resources), but binary death consumes more permanent party resources outside of battle. Meaning which version you have or use should probably depend on whether battles or the adventure is the main part of your game.

Consider an OD&D party. They get into a fight with a troll, and said troll wipes the floor with Party Member A. In OD&D he's out and done, and the party either choses to continue fighting, or pick up their dead teammate (if they can) and tuck tail. Afterwards, if the party can afford it, the spend gold on the resurrection, or they lose a party member and roll up a new one. The gold cost is great (or the party might pay some other price a la a geas), but it's a one time deal and other than losing the player in the combat, doesn't consume a lot of in combat resources.

Compare this to say 4e, where one character in the process of dying in combat consumes in combat resources (assuming your team mates are trying to help keep you alive). Actions are spent, healing surges are burned, powers are used, healing potions or wands are consumed. But ultimately, unless you Really Die, most of those resources are not permanently lost as resurrection gold might be.

Incidentally, going back to the previous discussion over how much "random" lethality was or wasn't a part of the original game design, as much as it seems Gary was a fan of dangerous and deadly worlds, he was apparently an equal fan of cinematic combat; Mike Mornard again:

Finally, Mike says he doesn't know why Gary didn't record this fact in a book somewhere: when he modified the combat system he got from Dave, he was consciously imitating the battle in the Errol Flynn Robin Hood movie. A movie hero never goes down early with a lucky critical, but low-level guys can be dropped with one hit.
These quotes by the way come from an excellent series of blog posts written about playing an OD&D game with an interviewing Mike Mornard found here:

http://blogofholding.com/?series=mornard

A very interesting look into what the early game was like and about from the perspective of an original gamer.