(This thread was inspired by the recent poll on use of experience points.)
What is the purpose of experience points?
They measure and calibrate the advancement in the stepped power curve that are PC levels, over time. The PC levels in turn give access to new powers and give the player the satisfaction of seeing his or her PC evolve.
However, use of experience points is an illusion, in most D&D games and in many other RPGs alike. Level advancement is the only required mechanic for PC power advancement.
Indeed, in D&D, whatever the level a group of PCs is, that group will only undertake adventures designed for that level. Not only that, but commercial D&D campaigns and adventuresd even calculate how many XPs the PCs are likely to earn during each adventure, and the level of each adventure is accordingly calibrated. Adventures would arguably not even be fun if undertaken by PCs of the "wrong" level.
Consequently, tracking experience points is useless, since the PCs will be of a determined level at certain milestones of the campaign anyway. This is all that counts and it will be invariable whether XPs are tracked or not.
The alternate solution then becomes to have the PCs level up at determined milestones and ignore XPs altogether.
If XPs are tracked, then PCs might reach that level slightly before or slightly after that milestone, from one gaming group to the next, which changes nothing really. It's only an illusion that PCs evolve according to their own merits and achievements. This is an illusion since the adventure has the PCs evolve at a predetermined rate, which is honestly quite precise. Or, if in a homebrew without a determine level advancement rate, the DM still reacts by pitting the PCs against level-appropriate opponents, so the result is the same, only in this case the adventure level is chosen depending on the level of the PCs, and not the other way around; but the result is the same, i.e. the PCs are pitted against level-appropriate opponents.
Not only that, but everyone is aware of that illusion. No one believes that "it so happens" that the PCs encounter given monsters when they are level 1, and "it so happens" that the PCs encounter these other monsters when they are level 10. We all know that the DM and/or the adventure/campaign designers plan these things most precisely.
I recognize however that there are rare D&D campaigns, usually homebrews, and usually in the form of sandbox campaigns, where DMs allow PCs to freely roam a game world and meet monsters that are way too strong for them; and the players then need to identify that fleeing or otherwise avoiding combat is the proper solution. This is fine and I recognize that XPs can have much greater value in such campaigns. But this type of game is the exception. By and large, most campaigns pit the PCs against "level-appropriate" encounters.
My suggestion is to do away with experience points as the default assumption in D&D Next. Instead, level advancement occurs at determined milestones that are in turn determined either in the adventure or campaign, or decided by the DM or by the entire playing group. This would simplify the game for a vast majority of gaming groups.
If, in the rarer freeform campaigns (in which category my own campaigns fall), DMs need guidance on when to have PCs advance in level, simple guidelines can be provided. Myself, I like to have PCs level up when an adventure hook is completed (depending on the adventure of course), so I wing it. "Now seems like a good time" is my guideline. For those that like something a bit more structured, but still much simpler than tracking XPs, levelling up could occur at every given number of encounters. Or at every given number of game sessions. This is much simpler than have the DM and all players track, calculate and use an encounter-based XP system where each monster, plus other achievements such as disabling traps, social encounters (!), getting treasure, "good RP" (!), and other elements are rewarded on a regular basis and requires caculations that, in the end, have no in-game result.
An XP system could still be provided for those that wish to continue using XPs, as an optional rule. This would not be complex, since monster power level still needs to be measured, to facilitate encounter design. For example, monster power could established in levels, e.g. monsters leves range from 1-20, and monster types are either minions, normal, elite and solo (to take the 4E example). XPs could easily be calculated accordingly if an XP system is desired.