I honestly think that difficulty settings should be composed of several individual components:
1. Career Difficulty: Hard (how the careers were set up at launch with the various specific requirements for each job level), Normal (the current set-up), and Easy (the current set-up, but with the daily tasks removed)
2. Aspiration Difficulty: Hard (launch difficulty), Normal (current difficulty), and Easy (one task per level for the little babies who think even the current difficulty is too hard).
3. Danger Level: High (very high chances of emotional deaths, easier to kill sims by drowning , electrocution, and other "accidents," said "accidents" are very likely to occur, so players who play on this setting have to be very careful or watch their simmies get crushed by satellites and burned to death from trying to cook mac and cheese with no flippin' cooking skill on a regular basis...well, play carefully and thoughtfully OR learn to save scum like an adult...), Moderate (emotional deaths and accidents still happen, but sim deaths from such random accidents are tamped down to, like, a 1 in 100 or 1 in 500 chance, something like that), Low (emotional deaths and accidents practically never happen, like, a 1 in 10,000,000 chance, and your sims can't starve or die of anything but old age or be taken away by social services...basically, life with all the sharp corners shaved off).
4. Social Difficulty: High (friendships and romantic relationships take several sim days to build up, with a hard cap on how many points of love or friendship you can gain with any one sim in one sim day, and when you tick off another sim by cheating on them or having a brawl with them or stealing from them, they hold a grudge for a set amount of time, during which they will not accept any friendly interactions and trying to interact with them in any way before they cool down will actually sour your relationship, enemies are easier to make than at current), Moderate (relationship building has the same pacing as at current, but with the grudge mechanic added to the mix), Low (no grudges, super-easy relationship building, nearly impossible to make enemies).
5. Relationship Decay: Off (no decay), Slow (relationships decay one point per sim day), Moderate (relationships decay at a pace of 3 points per sim day), Quick (relationships decay at a rate of 5 points per sim day).
6. Cost of Living: Low (about half the current rate), Moderate (the current billing rates), High (about double the current rate).
8. Dirt Build-Up: Sterile (surfaces and plumbing rarely get dirty), Normal (current rate of dirt build-up), Filthy (everything that can get dirty does get dirty practically every stinkin' day).
9. Skill Gain Speed: Quick (double the current pace), Moderate (the current pace), and Slow (half the current pace).
10. Skill Decay (basically, un-used or under-used skills losing levels over time): Off (skills don't decay), Slow (1 level every 4 weeks that a skill goes un-used), Moderate (1 level every 2 weeks a skill goes un-used), and Fast (1 level every week that a skill goes un-used).
And these are just a few of the difficulty settings that could exist. Basically, it would allow each individual player to set up their saves how THEY want them in terms of individual aspects of challenge and difficulty. Other things could include being able to choose whether Children, Toddlers, Teens, and Pets are player-controlled or 100% AI (each category individually, of course), a slider for alien abduction and vampire break-in frequency, being able to turn burglars on or off, and more! A great set of difficulty options would really enhance the game for every player.