The origin of the phrase is from the Latin "De mortuis nihil nisi bonum" which means "Of the dead, nothing unless good." It has been used since the days when we feared death and the mystery associated with it. We were afraid of the dead and the vengeance it was believed they could inflict on us or our family. And we wouldn't want to anger the dead.
Those concerns are still held in many faiths where it is considered unethical to speak unkindly about the dead as it is God's job to pass judgement. But for those who do not follow a religious code of conduct whose ethics will they be compared to if they insult the dead? Some say it's simply common decency to keep our opinions to ourselves, or cowardly actions as the dead cannot defend themselves (or sue for slander, apologise or change their ways).
To speak your mind about a public figure when they are alive seems fine but it becomes socially inappropriate when they die. Suggesting they aren't here to defend themselves isn't a strong argument as a public figure rarely hears all the criticism of them while alive. This BBC article looked at this dilemma after Michael Jackson died unexpectedly and wondered if we can give an impartial assessment of someone soon after their death.
Obituary writers deal with this quandary on a regular basis and it would be hypocritical to only list the good points of someone who was publicly despised by many. For the writers' job, diplomacy is needed but for news reporters it seems wrong to not mention why someone was disliked so vehemently.
Whatever our opinion of someone is it right to express it when the dead can't hear it anymore and it may only distress those who are left to mourn for them? "Think of the family" is given as a reason to remain silent but yet your resentment of the deceased may stem from a valid justification.
While to be gleeful about a death is not humane we should be able to stay true to our standpoint without dancing on anyone's grave. If we had the conviction to demonstrate our views last week why should we be a hypocrite this week? If pointing out someone's faults was allowed last week why is it automatically disrespectful to say the same things when they die?
I doubt we can find an answer to this that we can all agree with but I do wonder if we should start being more honest, even when someone has died. What do you think?
See Also: There's No Right Way To Grieve