I disagree that permadeath must lead to the destruction of the game. I firmly believe that it can be made into a viable, even enjoyable feature. Not that anyone seems to be interested in actually trying to make it so. The biggest point would seem to be keeping the costs of starting over to a minimum.
Paranoia, as a table-top game did fine with limited clones (lose all six, start a new character), in large part because character creation took only a couple minutes...the fun was in causing/getting into trouble, not in surviving it.