So there are two questions here. The first is do you murder the cast of players in the story (long or short) and the second, if you do, in what unspeakable way should you kill them off?
To kill or not to kill, that is the question...
Whether 'tis nobler in the mind to make them suffer the slings and arrows of outrageous misfortune,
or to remove their arms against a sea of zombies and by opposing end them: to die, to sleep.
I paraphrase, of course.
Before deciding on the answer, firstly consider: Will you ever want to return to this universe that you are creating?
Now you can of course return to the universe without using the same characters, but anyone will tell you that having at least some familiar faces is required. But I'm talking about the main cast. The Han and Luke, the Kirk and McCoy. And what about the antagonist?
So many questions...
Killing off your antagonist is easy, sometimes required, and unlikely to make the reader feel bad. Also, continuing anew in the same universe usually gives the expectation of new villains. Sure, if you're writing a collection of books, an arcing storyline is inevitable - usually with the same villain - but if you are writing something thillery or mystery-y then the reader will expect a new threat with each one. Sorted.
Killing off the protagonists? That's a whole different bag.
I think it's easiest to look at it like this: How negative is it going to be on the tale?
Without sounding like I think you should pander to the reader - read it yourself, the same applies - look at the impact on the story. I have always maintained that writing a player out as opposed killing them off is a decision to be made at the time. Not something that can be plotted.(Yes, an argument for when pantsing is the right way to go)
It depends on the moment. Don't kill them off because you want to. Don't kill them off because you 'should'. Don't kill them off because they are thoroughly evil and need to die. Kill them off because it is right for them to be killed off. Vader died right. He could have just been cut in half. Ending? The same. Meaning? Well, it would have been a different story, right?
So then, how should you kill off the killers, the heros and the innocents?
This one is easy to answer. Well, it's easy to say.
Kill them with heart. Kill them like you mean it. Like you want them to die.
Make their death mean something.
Kill a hero with sacrifice, kill a villain with renewed honor, and sometimes...
... just sometimes...
... kill them 'cause you wanna.
'Til next time...
PS: Go here. Read it.