One of the approaches I like in shooters is for you to only lose a couple of weapons when you pop yer clogs.
Me too. For any power up, up, up, up type game it's practically essential. I hate those games that go from really easy to impossible after losing your first life. One of the things I tried to do with Platypus was to try to make sure that although the weapons were a big help, they didn't completely overbalance the gameplay. And becuase they didn't power up, you could easily get back to where you were before.
I rather like the idea of doing a money-based one too. Which I will probably investigate in my next game. You buy your ship, and buy the weapons for it. The more you spend, the better everything is, but of course if you lose it that's a lot of cash down the drain. I'd probably have it so you don't get the money back when you finish the level, either. So the trick is, in each level, to spend just the right amount, not to spend more than you can make off a level. And of course you earn money as you go, so in later levels you can spend up larger. And you can save your game too, but this also costs money.