I dunno. It adds a bit of tension instead of being able to save before every combat. However, there are a few long missions near the end of the game where an auto-save would have been nice.
The biggest issue for me was the travelling you had to do to re-start a mission. If on mission failure you had simply restarted at the mission start location rather than back at base, that would have been a big improvement.
One idea I had was that you could save at any friendly space station by docking with it, but unfortunately it was never implemented. The missions weren't really designed from the ground-up to be saved mid-mission anyway, which was the biggest issue. A decent saving system would have to have been designed and implemented fairly early in development to ensure that all the missions used it properly.
To be honest I was against mission checkpoints in Defiance originally, for exactly the reason you suggest - it added to the tension and meant there were consequences for failure. However once they went in I realised how much better they made the game. It was still hard, but at least you didn't have to repeat 40 minutes of gameplay because you failed in the last 5 minutes of the mission.