Yeah, I'm used to this system in WoW (where it actually did more damage to gear). What makes the system there less annoying is that you can repair all your gear to 100% at an NPC with just a few clicks of the mouse.
Really You can get your gear to 100% at an NPC? Cause all that I know of only fix to 75% if you want better than that you have to find some one with the high enough skill level and the materials to do the job.

Damage to your gear even a EXP hit is expectable for death. But the hit seems to have gotten worse since the update thus the complaints.