You die, and you can't play that character any more. For death to be a truly serious matter, it has to be treated as serious by all the players. And this attitude has to apply not only to the death of your own character, but to other players' characters as well. If it happens that I'm willing to play a series of throw-away characters, I'm not sure this line of thinking holds up very well. I'll build up my character a few levels, go on a rampage killing much weaker players until I'm killed myself, then just start the cycle again.
Death is also far too simple an option for players to take.
Murder should be a big decision that is treated as the ultimate punishment for deeds done or the ultimate crime. Simply put, you must be able to inflict non-lethal damage to your opponent and be given the option of commiting the ultimate act of ending a life. Non-lethal damage is a great idea. If I want to play a highwayman, a kidnapper, a brutal thief, etc. As noted by Stephen, it offers much greater opportunity to roleplay these types of characters.