My group found the 3.5 exp system to be an absolute godsend!
Previously, when characters died, they tended to start lagging behind with no hope of ever catching up in terms of level. To compound the problem, several of the deaths occured for folks who had crafters burning some exp to make items, and those same folks were sometimes unable to make sessions as well. In the course of a very short time, there was as much as a 4 level gap in the party which is pretty nasty.
Enter the 3.5 rules. Now when someone falls behind, they catch up rather quickly. At the levels my group is at, it tends to be about an extra 20 to 30 percent exp per encounter for the folks behind on levels. Even though the cleric is currently a couple levels behind the rest of the party due to dying twice, he's not afraid to spend exp for crafting.
If there is any downside to it, it may be the fact that the new exp system makes it very easy to power-level newbie characters. That's probably not a concern for most folks, but if a 10th party decides to invite some 1st level character along for whatever reasons, that character can quickly gain several levels in a very short time should they manage to survive. Of course, the party members are giving up a share of their own exp to do that, but the amount gained by low-level character far outbalances the amount lost by PCs - PC's might be giving up a few hundred exp each while the low level character earns several thousand exp.