1) People have fun in different ways. From your post it seems like you have fun by over coming the challenge of having to have sharp split second response times (mario, prince of persia). Some people don't enjoy that, and despise having to play the same 2 minutes of a level over and over until they can do it in their sleep. Some people just like being an active participant in the story and action. Some people like to have to come up with a winning strategy. Some people like to find-the-pixel. Different styles of play, and there is generally games out there to support all different kinds.
2) I think you'll find that most game companies (video and things like pen-and-paper) have come to learn that "losing" isn't fun. When you invest 30 hours in a game and then die permanently because of a die roll, it's just unsatisfying and frustrating. There is a crowd that can't enjoy a game unless there is a real chance of failure, but that crowd isn't nearly as big as the one that just wants to have fun playing. I see a lot of alternatives to death and losing these days, such as failure leads down a different path, often more difficult than the "success path". I don't expect this will change much, in general people respond better to penalty than outright failure. So yes, game companies will probably not re-adapt perma-death because it will cause them to sell fewer games.