Originally Posted by A recent rules article on MTGSalvation:
Q: There are currently lands, creatures, and sorceries in both players' graveyards, so my Tarmogoyf is 3/4. What happens when it gets targeted by Sudden Death?
A: You will have one fairly lethargic, but living, Tarmogoyf.
State-based effects—those wonderful bits of rules that do things like cause you to lose the game, clean up Auras that are no longer attached to anything, and destroy creatures with lethal damage—also whisk away creatures with 0 toughness to the appropriate graveyard. However, SBEs aren't checked during the resolution of a spell or ability, but instead wait until after they've completely finished resolving and a player would gain priority again.
The last part of a spell's resolution is putting it into its owner's graveyard. Tarmogoyf is constantly rummaging around in people's graveyards trying to figure out how powerful it is (good thing it has eight fingers, otherwise it might have trouble with that). So by the time state-based effects are checked, the Sudden Death is already in its owner's graveyard and the Tarmogoyf has already gotten the go-ahead to pump itself up. The end result will be a 0/1 Tarmogoyf until the cleanup step, at which time it becomes a 4/5 again.