This loudness debate rages on I see, and I am willing to bet it always will. People have been trying to get their records louder than everyone else's for a least the last 50 years. Back in the days of vinyl, Mastering Engineers were the guys literally cutting the master discs after the mixing was done. Sometime they would need to reduce the amount of bass, or make a similar adjustment because at the louder volumes the needle would jump. Bass = a lot of energy, generally speaking. So the goal was, "as loud as possible with out making the needle jump out of the groove"
Now, with a variety of formats to consider for every release the loudness war has become ever complicated. For that reason, I am trying to forget about it. I just don't want to deal with it. But, in considering the question for myself (is louder better?) I did a little listening study.
Black Sabbath - War Pigs.
Considered by many at the time to be radical in regards to mixing, mastering and loudness. Compared with todays records, its soft. ( it hurts me to put soft and War Pigs in the same thought)
Aretha Franklin - Think
Probably one of the best sounding tracks ever, in my opinion.
Why?
These recording share something that becomes a casualty of the loudness war. Dynamic Range.
compare these to just about any similar record today.
As you push the fader up, and things start clipping, or your compressor gets going, and softer sounds get louder the vertical space between the soft and loud diminishes. Of course, thats your compressors job most of the time.
Dynamic rage is the key to a punchy exciting sound. When you listen to either of these examples be sure to turn it up real loud, they just kick your teeth in, and to be quite honest, sometime, that sound will make me cry, just a little, where as something that has been over compressed just hurts at the same level.
Check it out for yourself and don't just take my word for it.
Bob Katz, one the best in the business of mastering, was recently featured in Electronic Musician on this very subject.
Check it out. He convinced me.
http://emusician.com/interviews/emusic_keeping_dynamic/index.html
P.S - Blood Sugar Sex Magic, as stated above, is an excellent record, dynamically and otherwise. Its a good study for every engineer.