Sometimes, the sheer volume of armoured trousers, slightly differently coloured swords and sparkly potions far outweighs the actual utility of having so much variation. This usually occurs when RPGs simply have lots of items for the sake of it, and there's little to no appreciable difference between your Executioner's Blade and your Falchion of Doombringing.
Likewise, if an RPG's NPCs and locations vomit forth armour, potions, shields and assorted melee weapons like a broken vending machine, then you swiftly find; a) your inventory is overfilled with useless crap, b) weapon and armour shops are totally pointless since all your upgrading needs can be served by visiting the nearest dungeon, slaughtering its inhabitants and rifling through their pockets and c) money becomes as irrelevance as well.
To my mind, if your RPG is going to employ a crafting/upgrading system, then the elements required for this should either require a modicum of effort to acquire, so as to keep you keen to acquire them or they should be purchasable at not insignificant costs and generally unavailable from killing random NPCs. Again, ease of acquisition devalues the end result. That +50 Broadsword of Orc-Slaying with a Fire Damage crystal stuck to the hilt that gives you +10 Endurance and 25% Spell Resistance feels like more of an achievement if you actually had to work for the components. And you couldn't acquire all the bits for a duplicate from doing another couple of quests.
Like the OP, I'd far rather see a more limited selection of items that are actually functionally different and that, when I'm presented with a possible alternative or replacement; selecting one over the other is more of a choice than "Well, that one has better stats, yoink."
Conversely, I also don't want to spend large amounts of time studying the differing stats of two different suits of armour trying to decide whether Suit A's higher resistance to Slashing Damage makes it superior to Suit B which has poor slash resist but a solid Bashing Damage modifier! I'd rather have a simple Damage Resistance stat and penalties / bonuses / special abilities. Especially if the game is going to routinely throw NPCs who use multiple damage types simultaneously at you. Yes, Chainmail providing more protection from Slashing than Crush is more realistic, and makes choosing your armour more of a choice - but poring over the stats becomes pretty tedious.
The stats also have to make a difference. My hero(ine) shouldn't be able to wander into a fight wearing naught but the obligatory leather y-fronts the game requires to maintain a sub-18 rating and take no more damage than if they were to engage in combat in full plate. Yes, Fable III, I'm looking accusingly at you here.
So, tl;dr - I want my items to be meaningful within the game world - both in terms of efficacy of protection from or dismemberment of the NPCs, and in their relative rarity or paucity of the resources to alter or upgrade them.