Consequences of different forms of the nonlocal dielectric function epsilon(k) of a polar solvent in thermodynamics of electrolytes are studied. This is done with the help of an analytical approximation which covers, as particular cases, different types of results obtained by several groups on the basis of molecular theories or computer simulations. It is shown that the forms of epsilon(k) which include a range of negative values may not contradict experimental data for hydration energies (in contrast to which was argued before) when one goes beyond the simple Born model of an ion and accounts for higher frequency mode contributions. A study of the implications for the activity coefficents shows that oscillations of the interaction energy between ions, following from such forms of epsilon(k), lead to a compensation effect which brings the results closer to the prediction of classical electrostatics and to experimental data.