Wizard is 8th level. He can cast spells of level 0, 1, 2, 3 & 4.
He gains XP and become level 9. Woohoo ! Now he can cast spell of level 5 also !
Obviously, he will want to have level 5 spells to cast. So guess what his free spells are ? Level 5, right ! You're so clever !
Now, he dies and his raised. He's now back to level 8. He can't cast level 5 spells anymore.
So, you've got your answer.
Now, if your wizard gone from level 9 to 10 and back again to 9, that would have been different.
But, bear with me. Assuming the spellbook was not destroyed, he did wrote the spells inside, right ?
Now, if making him lose a level undo actions he has done, like writing spells, then you've got an important rule in your world: raising undo actions.
I imagine, then, that you could easily perform mass resurrection when a psychopath perform a mass murder: just catch him, kill him, and raise him. His murders will be undone, resulting in the raising of all his latest victims.
As it's completely stupid, the spells stays in the spellbook.
If he levels again, he'll got two new spells again. This isn't a benefit of the gained level, this is a benefit of leveling as a wizard.
Where's the harm ? That'll hardly unbalance the fact that he'll lag one level behind the rest of the party. Also, the wizard is a class that has been built to gain new spells over the time.
Just consider that a cleric or druid knows all spells, period. And has better spells (proof ? clerics can get wizard spells, from domain or from the XP-free miracle, even high level ones, while wizards can never, never, never get cleric spells, even simple ones like cure minor wounds, or only at the 300 XP or 5000 XP cost of a limited wish or wish). And cast more. And have better saves. Better BAB. Better HD. Better AC.