Okay, don't get me wrong, I do enjoy a happy ending, but sometimes I actually like a story if the bad guy wins (if done well). I've seen several movies where the villain succeeds and I wouldn't have picked any other way to end on.
I think it's more of a challenge to end on a sad note and still leave the reader fulfilled, although I have never actually read any novels where the villain does win. I've been thinking about the pros and cons of happy vs sad endings, mainly because my Nano novel might not exactly end on a happy note (yes, I've already planned the ending). It's a Horror so I think I can get away with it.
So, what does everyone else think? Do you prefer happy or sad endings? Will you read a novel where the bad guy wins if it is done well?