I support dwarven nosebleeds. It's a minor injury, that everyone is familiar with. It brings the violence home.
I used to get nosebleeds any time the weather was hot (good thing I never needed to go to a Japanese beach
). The bleeding wouldn't be directly harmful, unless I was prevented from stopping it for an extended period, but stopping the bleeding was a serious hassle, that could cost me one or both hands, for as much as an hour, especially if I didn't have a tissue or rag handy.
A bloody nose won't kill you but it's a huge hassle. Eventually, I got so fed up that I got the veins cauterized (--fresh burnt sulfur on a long stick, like a match. --Makes your eyes water for a few hours.). My nose still bleeds occasionally, but only the tiniest amount. Typically, it doesn't even drip, and I don't have to do anything about it at all. A punch to the nose might tear the burn scar and bleed just as profusely as before, though.
Holding your nose impairs your vision, and the bleeding will make your eyes water. This might penalize someones ability to hit, and leave players the choice of whether to fight with both hands, or use one to hold their nose.
The clotted blood will destroy your sense of smell for several hours, which might be important for races that rely on pheremones or scent tracking. Imagine punching a werewolf in the nose, before running away, so he can't track you. That would be sweet.
Posterior
Epistazis, bleeding towards the rear of the sinus cavity, may require medical aid to stop, and is more likely to result in in choking on, or swallowing blood. Fresh human blood will upset the human stomach and cause nausea. Attila the Hun is the most famous person to die from a nosebleed, choking on his own blood, while unconscious.
Some poisons will cause a nosebleed, cluing in the victim that something is amiss.