I can't stress enough how much this depends on the game.
Usually, I pick the hardest difficulty. Mass Effect? Insanity. Splinter Cell? Professional. Darksiders? Apocalyptic.
However, the games where the difficulty usually matters most lock it behind completion. Devil May Cry, Ninja Gaiden, Revengeance... all amazing games that really suit to my preference. However, at best you can pick 'Hard' or equivalent right out of the gate and you have to unlock the harder difficulties by completing the game. For the types of games that they are, that works really well and is very smart. 98% of people who would try a harder difficulty would not be able to finish it and if they did, they wouldn't enjoy it. Whereas they'd have a blast with it on a second playthrough.
It is something I think XCOM could have benefited from. I tried Classic out of the gate, but it was way too hard for me. I was unfamiliar with the progression of the game and it made me mess up a bunch. Luckily, I loved the game so much that I still tried it on Normal and then moved on to Classic and later Impossible once I got the hang of it.
Shooters, I usually pick something like Normal or slightly higher. I'm not very good at them. Same for racing games. With the exception of very arcade style games for both.
Overall, I feel I am very contra to the preference of most of the crew of Giant Bomb. They seem to not like replaying games much. I often find I have the more fun on a second, third, fourth etc. playthrough compared to a first. Dependent on the game again, for obvious reasons.
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