Certainly the game should be challenging to the players, but at the same time there needs to be some way for the PCs to play and survive. I don't have a problem with the idea that there can be encounters that are beyond the PCs abilities, but as long as they have some way of realizing that before they are getting killed.
I've played with DMs who are so open to letting the PCs do what they want that they "stumble" into adventures that he DM planned for 4 levels from their current level. The PCs get the hooks, they follow up on them, there is no indication that this is WAAY too much for them until they are in the thick of it and have no way of retreating with everyone alive. I usually didn't play with those DMs for long.
My ideal version of a DM isn't one who feels that have to make things as tough as possible, but someone who makes things a mix of difficult and not so difficult challenges, and most importantly, involves our PCs in the campaign in clever, creative ways that can be rat-bastardly without having to kill us off to prove what a great RBDM he or she is.