I look at games like The Witcher 1 & 2 as games that can be almost as punishing as many of those old games, while also being far more complex. TW2 on the hardest setting, especially at the beginning, is absolutely brutal. Many of those old games were very timing focused - jump at exactly this time, dodge at exactly that time, etc. Games like the Witcher series retain a lot of that on the harder difficulties, while also adding a heavy layer of strategy as far as how you are going to approach a battle or sequence. Not to mention that new games have stories and depth to their universe that usually blow older games out of the water.
The big difference is that new games will usually have different options for difficulty. But I actually appreciate that. I was never a very competitive gamer - I don't play much online, don't go for the high score, am not into games for the "challenge" etc. I'm much more interested in the plot and universe that games can tell, and I tend to play games to unwind. I play a lot more story or world focused games, like western RPGs and open world shooters and the like. So for me, I usually play on "normal" difficulty levels which compared to old games
are laughably easy. But as long as they have those harder difficulties for those people who are looking for that challenge then I'm down with it. To each his own.
Games that artificially lower the difficulty so that even their hardest difficulties aren't that hard kind of annoy me. Mass Effect was a good example where even the highest level difficulty was pretty doable and would only be a hard level difficulty on many other games. I really think devs should work to give players a good range of choices so that if you want that challenge, you can have it, but if you don't then you aren't forced to beat your head against a wall.
Still, some of those old games really hit my nostalgia spot and I will occasionally try one out for old times sake. But then I actually play it and remember why I like modern games better.
ETA: Mausermark, I see that you've got Goldeneye in there. Have you played that recently? I have loads of memories from that game with friends and whatnot and had a super thick set of rose-colored lenses for it, but when I went back to it not too long ago I actually thought it was not a good game.
On the other hand, Quake II had the best multiplayer. What a great game.