It honestly depends on how it's implemented, but I'm not really adding anything new to the discussion here. When I played Oblivion, I was young then and didn't care for much of a challenge. As a result, I never turned god mode off. Now, I have much higher standards for myself. But the one thing I remember from Oblivion god mode is that items never degraded because of it. I had no idea how the repair system worked, and I frankly didn't care since I felt it would be much too difficult for me to deal with. That was one of the reasons I was glad Skyrim ditched it. Granted, though, it did take something from it. Now that I'm more mature, I understand the value of a good repair system.
One system I feel like mentioning is that of Vindictus. Weapons and armor lose a bit of durability after every instance which is easy enough to repair by going to the forge and paying a modest sum. Naturally, the more advanced gear you have, the more it'll cost to repair it, and some lower level instances don't even damage your equipment at all. But if you don't repair your equipment and you let the durability go down, you actually start to see wear and tear on it. I'm not sure if it becomes less effective or what happens if it reaches zero, but that visual effect is cool.
One more thing about Vindictus is that armor acts differently in instances. If a certain piece of equipment takes too much damage, it'll break and will offer A LOT less protection. But if you have a temporary armor repair kit (you can bring 4 with you into an instance at a time), you can fix the entirety of your armor and it'll be as if nothing happened. Even if you don't fix it during the fight, your armor will automatically be fixed when you get back to town, and it breaking during the fight doesn't impact its overall durability. Sometimes I feel like my armor breaks much too easily, but when I think about it, when you look at some of the bosses and what they hit the player with, I'm surprised they don't just break everything. I'd say it's one of the better repair systems.
One system I feel like mentioning is that of Vindictus. Weapons and armor lose a bit of durability after every instance which is easy enough to repair by going to the forge and paying a modest sum. Naturally, the more advanced gear you have, the more it'll cost to repair it, and some lower level instances don't even damage your equipment at all. But if you don't repair your equipment and you let the durability go down, you actually start to see wear and tear on it. I'm not sure if it becomes less effective or what happens if it reaches zero, but that visual effect is cool.
One more thing about Vindictus is that armor acts differently in instances. If a certain piece of equipment takes too much damage, it'll break and will offer A LOT less protection. But if you have a temporary armor repair kit (you can bring 4 with you into an instance at a time), you can fix the entirety of your armor and it'll be as if nothing happened. Even if you don't fix it during the fight, your armor will automatically be fixed when you get back to town, and it breaking during the fight doesn't impact its overall durability. Sometimes I feel like my armor breaks much too easily, but when I think about it, when you look at some of the bosses and what they hit the player with, I'm surprised they don't just break everything. I'd say it's one of the better repair systems.