This goes without saying.
I'm asking which of these you find more fun:
"I live by a certain ethical standard. If I fail to live up to that standard, I lose my powers. (Because my powers come from a higher power, or because they hinge upon my own sense of self.)"
"I live by a certain ethical standard. I try hard to live up to those standards, but I don't lose my powers if I fail to. (Because, while a higher power may have awakened my powers, they ultimately come from within me.)"
I take the second(though I could take or leave the parenthetical explanation). A couple reasons spring to mind.
1) Players: IME, a player who wants to roleplay a Paladin(or other restricted class) is going to do so, or at the least, try their best to do so, with or without fall mechanics. A player who chose that class but doesn't care about the ethical codes isn't going to suddenly roleplay those codes because there are mechanics for them, they'll just try to work around them and find loopholes where ever they can. Where they cannot, and they get punished, arguments are likely.
I don't know about you guys, but when I hear a paladin's player say something like, "I GUESS I better not do that, I don't wanna lose my powers." it just completely misses the point of a paladin's code. You're not supposed to be doing or not doing something to keep your powers, you're supposed to be doing something because it's the right thing to do.
2) Doubt and Ambiguity: With fall mechanics, there is none. With fall mechanics, a paladin needs never doubt himself. He knows he is walking the path of righteousness. His god tells him so, in no uncertain terms, with every divine spell, every smite evil. After all, if he strayed, he would lose his powers. Conversely, a paladin who has fallen from grace always knows it, too. I've seen people try to run this with fall mechanics in place. The over-zealous paladin who strays too far in his search of the right thing, ultimately becoming the evil he thinks he is vanquishing. It always rings hollow to me with fall mechanics, though, because one day this character's god would have stripped him of his powers, and he'd know it. In no uncertain terms, he is told, "Okay, you're not a good guy anymore."