OK, I've been playing this game a lot lately, and a lot in the past, and I can't for the life of me determine the logic behind what happens when you blow up. Usually you restart the level, but sometimes you don't. I've heard people say that it has something to do with the number of ships you have in stock, but that's bullshit because today I ran my lives all the way down to zero in the same spot without having to restart the level, and another time I died with only one spare ship and didn't have to restart the level. Most of the time it restarts unless you are fighting a boss.
Whatever the system is for determining whether or not you have to restart the level, if it isn't just random, its impossibly arcane. WTF?
BTW, as much as I love this game, its frustrating as hell because of the STUPID power up system that plagues all Soldier games. The hardest thing to do in the entire game is avoiding power ups that you don't want.