Kinda important to have some way of stopping the game for when-- not if, when life happens in a MP game. True, the player could log out to avoid death, but it messes with their multiplayer bonuses if you do that. Not to mention the pacing of the game, or allowing other players to take their spot. Especially if they only need to be gone for a short amount of time, like a restroom break. It's just one of those things that you can not use if you don't want it, but it's there for those that do.
Definitely give the option for the host to resume gameplay if someone doesn't unpause. Host should always have the final say, in order to circumvent inevitable trolls and pranksters.