The big thing about her death is that it just wasn't done back then. The hero ALWAYS saves the damsel in distress in the nick of time, especially, if it's his love interest. It was the first time that a main love interest died that shocked everyone. It would be like Superman not saving Lois Lane. I actually read #121 first hand and as a teenager, her death was quite traumatic. I reread #121 and I STILL get a little shiver in my spine!
I agree, this would be a great time to bring back Gwen. In the wake of the movie and Peter coming back as Spidey, it's a great opportunity.
Someone I would have liked to have seen as Gwen would be Ashley Greene with blue contacts. Emma's smokey voice just didn't sit right with me, but that's just me!