I thought that Ninja Gaiden on X-Box was the best effort at marrying Next-Gen graphics and 3D movement with real difficulty akin to the 'good old days'. That and the game was just plain awesome in every respect. I ended up finishing it 3 times, twice with all the scarabs, but cracking those first few levels took a LONG time. I was even frustrated and gave up for probably a month, but once you get out of ancient Japan, the game starts moving along and gets really exciting.

The save points are sufficiently distanced from each other as well - so when you die, there actually is a penalty, there is some part of the game that you have to do all over again upon dying, if you get my meaning.