1: Relative to your armor. In the beginning you'll want to stay away from them, but as you progress they become easily farmable and then an annoyance.
2: In Normal, you only lose half your cash on you - this can be circumvented by putting excess money into a chest. In Difficult, all your items drop when you die. (minecraft style) In Hardcore you only have one life. Normal is recommended for beginners.
3: Infinite, except on Hardcore difficulty. --- Do you believe in the heart of the cards?