I'm another, "yes and no," vote...
I run a very status-quo sort of campaign. I determine, even before thinking about who the characters might be or what they might be interested in doing, a lot about the world, and the 'bad guys' that are going to be in it. I know who they are, what they are doing, and what sort of resources they'll be willing and able to call upon in the event that a party of adventurers (likely the PCs) interferes with whatever it is that they are doing...
I know, for instance, that Vladsylvania is regented by a Vampire Lord, and that if they PCs attempt to directly confront him over his jerk-wad policies, that he'll gladly eat them for lunch... And that if they get too far out of line while in his country that he'll send X number of baddies to take care of Y situation. I also know that Stinky Pete, the second sight addict, will definitely try to rob anyone who he thinks he can get away with robbing, and that he'll roll over on Archibald Barisol, his dealer, in a heartbeat if confronted by any sort of strength.
On the other hand... If the party ends up being a group of paladins and clerics, I'm probably going to lift, or otherwise make easily bypassable the ban on all religious worship in Vladsylvania, so that the PCs aren't forced to step out of line or directly confront the evil vampire lord over his jerkwadery.
My philosophy in DMing is that, while there should definitely be encounters out there that the PCs are going to be completely trounced by... They should never be forced into such encounters. And any encounters that I do throw at the party without giving them much in the way of the possibility to avoid it (random encounters, etc.) they should definitely be likely to win. My players know that there is stuff out there that will just plain kill them. They also know that as long as they don't go galivanting off into absolutely every country run by an evil vampire lord to end his reign of jerkwadery, they are pretty likely to succeed at whatever it is that they want to do.
Later
silver