I'm with obsidianpower790 on this one. The current system where the player takes damage immediately / within just a few seconds in a no-oxygen environment seems ok to me, and realistic. Being in space without breathing gear is not the same as being underwater, it is a whole lot more dangerous.
Also, a new bar is already being added in GC3 for something else, and I think we don't want too many bars...
IRL, going into a vacuum with no breathing apparatus would kill you quickly, usually in less than 1 minute. If you want to know why I think the usual cause of death is that all the moisture in the exposed parts of your body would instantly boil (water boils below 30 degrees in a vacuum) so that includes the insides of your lungs which would then stop working, even if there some oxygen in there. Keeping your mouth and eyes closed would be a good plan! I think you'd also need a noseclip to survive the full minute, as you wouldn't be able to seal off your nose completely without it, if moisture is busy boiling away. There's also the cold, depending maybe on what you wearing and whether you are in sunlight or not.
More reading:
http://www.newscientist.com/blog/space/2008/06/how-long-can-you-survive-in-vacuum-of.html
And here's someone on a NASA blog suggesting that holding your breath is
not a good idea, though I don't see a clear reason being given:
http://imagine.gsfc.nasa.gov/docs/ask_astro/answers/970603.html