A Million times no! EXP is easy to get, the gear damage is more a deterrence than de-leveling, the EXP gain in this game would have to go back to how it was at launch with fatigue for that to actually be such a burden on players. Yoshi has the game how it should be for dying, just because you die doesn't mean you should have to waste up to a few hours of your time grinding back your levels FFXI style.

Death = gil out of the economy/gives players another reason to level crafting. It's grand how it is.