Difficulty

Difficulty can be toggled via the Options menu in Minecraft. Changing this option has a direct impact in the gameplay itself. No setting impacts the quantity of hostile mobs that spawn, including peaceful. There are currently four difficulties in the game.

Possible difficulties
Notch said in his blog that he would add the "hardcore" difficulty level. The rules would be that when you die, the world is deleted and you have to start afresh with a new world. The idea came to Notch from a Minecraft gameplay blog on the PC Gamer site (blog)

Trivia

 * Notch made a tweet on October 22nd 2010, stating that "I'm changing "difficulty" to "realism". Lowest setting = creative. Highest setting = starve"