This is a general discussion of wound mechanics in RPGs. There are three common mechanics for wounding: simple hit points, hit points with hit locations, and wound tracks. Simple hit points are used in games such as D&D or the Unisystem. You have a single number representing the toughness of a creature. Each hit cumulatively reduces hit points a certain amount, and when it reaches zero the creature is incapacitated or killed.
Hit locations generally mean that you track the amount of damage to various parts of the body (usually 6 to 12) -- each being a separate set of hit points. Mechanically, the main effect of hit locations is generally linking impairment (i.e. action penalty due to wounds) to a specific body part. For example, suppose a character gets shot in the leg. By most hit location systems, she now has to crawl or hop, but she can still shoot or swing a sword with no penalty (since those don't directly involve a leg). In most games, a body part has a binary state (i.e. good/disabled) or perhaps trinary (i.e. good/impaired/disabled).
Hit locations usually can be determined by random-roll, called-shot, or some combination and/or choice between the two. In general, random-roll works well for missle combat, but not so well for melee (where conditions often seem to dictate only a certain range of results). Strict random-roll can be hard on suspension-of-disbelief because even expert shots cannot hit a specific part. However, many called-shot mechanics have the flaw that if you shoot for a specific part then you cannot hit any other parts. i.e. If I aim for the center of the chest, then I have a reduced chance of hitting overall and I have no chance to hit in the head. This can be solved by having a distribution of hits around the part that you aim for, at the cost of increased complexity. Millenium's End, by Charles Ryan, has a mechanic of transparent overlays which show the spread of hits which are put on silhouettes of targets. The Babylon Project, by Joseph Cochran, has a standard hex-map of the body, with misses recorded as number of hexes off from your target location.
As far as flavor goes, a problem I have with hit location mechanics is that they will often fail to match the narrative detail I already have. i.e. I describe the enemy warrior recovering and jumping up with a backhand swing, and the result says a hit to the opposite side. I suppose those who like them simply get used to rolling the dice first and resolving the location before describing the attack. However, I usually prefer to describe the attempted attack, then roll dice, and then describe the result.
The most commonly-seen wound track system was pioneered by Ars Magica in 1987, by Jonathan Tweet and Mark Rein•Hagen. It was then used in Shadowrun (1989), and then its use in Vampire: The Masquerade cemented its popularity. The basic principle is that wounds are cumulative like hit points, but each mark on the wound track means a higher penalty to all actions by that character. Usually there are only a few (6 to 12) steps in the wound track, but there is a higher-granularity number for defense (called "soak" in Ars Magica and Storyteller).
This has the advantage of simplicity. It also takes into account more general effects like pain and blood loss, whereas hit location systems often mean that someone can fight almost as well with one arm chopped off. However, it loses the graphic descriptiveness of hit location damage.
However, in game terms, both hit locations and wound tracks result in a positive feedback, also known as a "death spiral". An early success results in a wound that gives a penalty to later rolls. This increases the likelihood of another success. Soon there in an inexorable progression to victory. This may be viewed as realistic, but in game and dramatic terms, the slide into victory can feel anti-climactic.
Basic hit points are simpler and do not have the anti-climactic death spiral. The issue of realism is a mixed one. Many wounds do not cause immediate impairment even if they are fatal. Most wounds cause death through blood loss which takes time. Damage to the lungs or heart can easily be fatal but it takes time for the lack of oxygen to have an effect on the system. This means that not having an immediate death spiral is in some cases more realistic. A more realistic abstraction may be for wounds to only cause impairment after they have had time to take effect.
It is technically possible to mix hit locations and wound-track-like penalties. For example, a wound to the right leg gives a -3 penalty to movement, and a -1 penalty overall. However, that is clearly more complicated than either mechanic by itself.
There are a variety of alternate wounding mechanics. Some systems use temporary penalties, such as 1-turn Pain penalties in GURPS. This has a similar effect but at least reduces the inexorability since if the wounded fighter can make it through the penalty period they are again on an even footing.
One issue with the standard systems is the cumulative effect of injuries. In most standard systems wounds are strictly cumulative, so two 5-point wounds are identical to a 10-point wound. Arguably, this does not represent reality, nor does it strictly emulate cinematic genres like action movies. Numerous minor wounds to extremities or surface injuries are not equivalent to a wound to vital organs.
One way to deal with accumulation is a non-linear wound track. For this, you have a wound track similar to those in Ars Magica, Shadowrun, or Storyteller. However, there are different numbers of boxes at different levels. i.e.
1. Hurt O O O O 2. Wounded O O O 3. Serious O O 4. Grievous O O 5. Crippled OFind the amount of damage you do (the number on the left) and mark the leftmost box on that track, staging down only if all those are filled. Thus, it takes four 1-point wounds to scale up to a 2-point wound. Thus, after taking a 3-point wound, you could take up to 3 2-point wounds before being any worse off. This prevents small wounds from quickly accumulating into lethal effects, but allows them to accumulate without much bookkeeping.
Another alternative is degrading damage resistance. This was used in a homebrew I played, Spellcrafter by Richard Garfinkle. It has a damage resistance (DR) rating, but wounds and the impairment they cause are recorded independently of DR. However, most wounds will also lower DR. So let's say you start at 5 DR. An opponent rolls a 6 damage total against you. Comparing 6 damage to 5 DR results in a light wound, and your DR is reduced by 1. The wound is recorded separately from reduced DR, and that is what causes impairment. Later, the opponent again rolls a 6 damage total: but now that (6 damage vs 4 DR) is a medium wound. Having a low DR doesn't do anything bad to you in itself, it just makes you more vulnerable to later wounds. However, in practice this wasn't very different from a hit point system where the damage done had a very high variance.
Another option is to track wound impairments and lethality separately. This is used by CORPS, by Greg Porter. In CORPS, each wound causes impairment to its hit location, and also have a chance of being "eventually fatal" or "instantly fatal". Personally, I think that this has a relatively small gain in realism over single-track systems.
The following are a collection of links to various real-world sources on wounding -- generally from modern-day wounds and firearms since that is where the best data comes from.