As DM, I don't like to fudge. Partly because no matter how story-like the game becomes, it's always rooted in a (complicated) game of chance. Mainly, though, I don't like to fudge because I want to be surprised by where the game goes, and nothing takes the game to strange new places like the right random dice rolls.
Well, nothing except the crackpot plans of the players.
On the other hand, I don't like frequent PC death. Our campaigns revolve around developing interesting, if frequently pathological, characters and sending them off on crazy adventures. In this way our games resemble serial adventure stories. Protagonist death is rare or non-existent, but failure is always knocking at the door.
Think of Whedon's Firefly... now remove most of the quality, and add in a heaping dose of surrealism. My games in a nutshell.
I don't need to fudge because I've taken PC death almost entirely off the table. PC failure leads to more playable consequences, not rolling a new character. Works like a charm for us, but I can how this kind of play would be unsatisfying if the biggest kick you get from the game is survival in a ruthless environment. Our style only works if the player's have characters whose goals extend beyond survival.