2 coppers...
I tell my newbie players (those new to the game) up front that there will be a learning curve of a session or two for them to get used to my style and to the rules themselves. I will be pulling punches a bit - for them only. After that, it's no holds barred.
Teflon had it perfect... I tell my players, "I try to create an adventure that will be fun and balanced, but challenging - you're going to have to earn your rewards. And by the way, once we're into combat, I'm trying to kill you."
I did "call off the dogs" once and only once during the course of my last campaign. I vastly overestimated the abilities of the party and underestimated the damage a foe I threw at them would do. A couple of criticals on his part - and critical misses on theirs - exacerbated the situation. After two PC deaths and the rest of the party unconscious save for their cleric (down to about 2 hp), I "called off the dogs" (I even managed to make it pretty believable but a couple of the veteran players realized that I saved their hides in the interest of everybody having a good time).
My campaigns tend to be rather lethal... you see at least one PC death every 3-4 sessions... occasionally it's because I roll lucky (which will happen) but more often than not, it's because the PCs play dumber (tactics-wise) than they should (and they usually recognize their mistakes afterwards).
I tend to teach them lessons the hard way... after getting whacked several times when casting, the wizard learned to back up first, THEN cast spells. When all of the PCs were fighting in a line during an encounter with some gnolls, the gnoll Adept took up a flanking position and blasted everyone in the party with a lightning bolt (except the rogue, whose imp. evasion got him out of the way)... didn't kill anyone, but hurt 'em lots... after that, the party didn't just line up to whack on baddies any more.
I also try to run my monsters intelligently... they run away, they flank, they attack/retreat/attack, they hide, they use their missiles and spells to best advantage allowed by their intelligence, and so forth. I also have repurcussions for the PCs' actions... when they freed a monster from imprisonment but didn't manage to kill him and he escaped before they could catch him, they weren't all that surprised when he showed up a couple of days later with several other fiends and a retinue of zombies.
They forgot to take a rare map discovered in a remote village with them (they made a copy but didn't take the original... despite knowing a slaver ring was on their trail and knew the original existed) when they went to resupply for a long trip. When they returned, the village was slaughtered and the map was gone... they wound up having to race the slavers - and had to get help from their arch-nemesis to do so (I had to adjust my adventure considerably when they forgot the map because it made sense that the slavers - who knew where it was - would get it, rather than simply track them).
Finally, a word about "the rules." I always tell my players, "if we get into a situation where I don't know the exact rule, we're not going to stop the game while I try to find it. I'm going to make a ruling on the spot, and we'll continue on. I will research it before our next session, and if I was wrong, the rule will change for the future only... but we will not "undo" what has already been done." They didn't complain because, as it turned out, my rulings usually favored them a little too much. Which is okay.
My attitude is, "this is a cooperative effort." It is a cooperative effort insomuch as the DM and PCs are trying to build a shared fantasy story/experience. They have different roles to play, though... the PCs are responsible for being the "heroes" of the story. The DM is responsible for creating a framework for their story and by providing them with satisfying challenges and commeasurate rewards.
I try to listen to my PCs and tailor the rewards - and challenges - to their desires a little bit... though not always in ways they expect. The party's ranger wanted to get a Dire Bear for a mount, but knew it was a longshot because he was still a ways away from Animal Friendship at a high caster level. He called me up during a week in which he had levelled and was trying to choose a Feat. He asked if he could take the Leadership Feat. I told him he could. He asked if there was a way he could buy a trained Dire Bear. I told him, "no, but make sure you're here on Saturday." That Saturday, I introduced his new cohort about an hour into the adventure... an awakened black bear who was studying to be a druid (had 1 level of druid and a +5 ECL for a total of 6th level). While this was not quite the dire bear he was looking for, he was more than satisfied. And the bear became as "alive" as any of the other PCs.
My 2 coppers. Take my experience and suggestions and keep what you like and toss what you don't.
--The Sigil