Unlike those who have gone 'limitless FTW', I'm not that big a fan of it, as it quickly becomes the case that I lose track of what items I have (as ZP put it... trousers). Also, I feel somewhat ridiculous lugging around quarter a million credits, a hundred grenades, two hundred medpacks and several dozen means of killing... well anything, and summing up to encumber my running as though I'm naked (KOTOR, good game otherwise). If games had visible inventories, I'd have been a hulking mass of guns and grenades.
I reckon the mass encumbrance of games like Fallout 3 and Oblivion was the best: a limit, but without needing any stupid shuffling. You can still carry a lot of shit, but not so much that you don't know all of what your dragging behind you.