Try playing a higher level game where Death happens more often. When you have a 4 player group and you have 1-2 characters die per game session, How Dramatic is that? What happens to story continuity when after 5-6 games you've cycled through all of the Original Characters?
Two thoughts:
1) On continuity: I think we all agreed that D&D is deadly at both high levels and very low levels. So your DM has to deal with this issue from the very beginning of the game - some 1st & 2nd level characters are probably going to die and there won't be any money to Raise them. Additionally, their death isn't going to mean a whole heck of a lot: "The orc hits you for ... um ... 22." Maintaining contunuity is a problem the DM should have a handle on.
2) On the meatgrinder: You mention losing multiple characters per session and Hong mentions playing the notorious RttTOH as examples of how many high-level characters can die. It sounds like both of you are playing meatgrinder style modules. This type of module is not for everyone; take a look at all the threads from DMs saying, "Help, my players are all dying and not having fun." It's not a function of whether Raise costs 500G or 5000G; even at 500G the fun of going "Fight, Die, Raise" starts to wear thin. Moreso, meatgrinders are certainly not for people who spend lots of time on character backgrounds when they should be munchkinizing their characters instead. ;-)
2a) Additionally, these 3E meatgrinders were surely designed with the 3E Raise costs in mind. Under 3.5E it's no surprise that they'd require some tweaking. And, as I mention earlier, that there are people who will not find this fun regardless of how much tweaking the DM or module designer does.