In any time, if your army has a reputation for not taking any prisoners, or for killing those that surrendered, the defenders of any future territories are more likely to fight to the death. This in turn increases your own casualties as well as theirs. On the other hand, if the enemy surrenders, you just relieved yourself of having to storm defenders or commit troops to a long siege. Thus, a competent general will always seek to have an enemy surrender to avoid excess casualties. This was no different with the Imperial Japanese Army.

Take the Allied forces in the Pacific theater, for example. One major contributor to the refusal of the Japanese to surrender came in the form of an unwillingness by Allied troops to take Japanese prisoners, which was due to a variety of factors, including the fact that some Japanese may have "pretended" to surrender, as well as more base reasons like racism. The common practice of defiling Japanese war dead (such as through skull taking) was probably worse-the Japanese have had a sort of religious ideal with preserving the purity and wholeness of the body, and to have one's body defiled was-quite literally-a fate worse than death. Needless to say, these sorts of actions gave the Japanese militarists a major propaganda tool to urge their troops to fight to the end. It was only after Allied commanders started giving more incentives for frontline troops to take prisoners that the amount of Japanese PoWs in captivity started to increase.

As for Japanese brutality, I talk about that a bit here.