Yeah, with very linear games where the strict narrative is driving the experience it's fine to have immortal NPCs. But I generally hate it when the game just ends because someone died. In many cases I think the only 'game over' state should be the players death. The gameworld should be able to move on, especially in games that are more open-ended.
BTW: making kids immortal is pretty much political correctness to avoid a backlash. I say, either don't have kids in a game or make everything mortal.