No chip death is being used as a crutch for balance by artificially extending match length instead of actually balancing the roster.
So, in that sense, no chip death is bad because it enables devs to not put as much effort towards character balance while still giving the illusion of balance because characters appear to still have a chance to come back as long as they keep blocking even though they would have lost much earlier in the match if there was chip death.
I don't necessarily disagree, I just think it is too soon to tell. It might be exactly what the doctor ordered.
And I think it might seem like it is a buff to newer players, but I see it more as a buff to more veteran players. A good player is going to be much more difficult to open up.
SFIV as it is now has an illusion of equality. Even against good players, average players can luck out on occasion and make the game seem much more equal (based on health) than it really is.
Early reports on SFV is the opposite. More veteran players are saying it is highly punishing, and the gap between good and bad is larger (and it should be imo).
Edited to add:
@DukeMagus
Isn't death by chip (or chip at all) the extra rule?