I've generally chosen not to participate in the Medusa discussions because they've been so heated and argumentative (also, I've had zero problems with Medusa myself, other than momentary annoyance), but if it were up to me and I had my 'druthers, I feel much the same as
@PulseFox: While turned to stone, players should gain a lot of defense.
Also, enemies should stop trying to attack the player while turned to stone. After all, they've become an unmoving statue.
Furthermore I don't believe stoning should work unless there's enough ambient or artificial light to actually see the Medusa's face, but I doubt Terraria's scripting engine would support such a feature.
Of course, none of this will prevent you falling to your death if stoned (heh heh, double entendre), but that's acceptable. Bring a horseshoe, horseshoe balloon, or wings when digging if you want to ensure you don't die from falling.