That sounds like fun! It's too bad the update ruined it.
Just going against the trend here, I'll refer to Phantasy Star Online. After maxing a character or two, myself and a fair few others got into self-imposed permadeath playing and I have to say it was by far the most compelling play that game provided. It was like crack for all of us.
That's another thing about permadeath. Sometimes it can be really fun to talk to your friends about.
It's pretty interesting that playing on permadeath had such an effect on the economy. That's similar to most roguelikes, where you buy anything that'll give you even the slightest boost.