I'm running a 10th level game, and playing in a 12th level one - we spend an inordinate amount of time identifying, selling, trading, and swapping magic items. When everyone has got something nifty and valuable its tough to ignore it - even those non-magical masterwork chain shirts add up. I'd like it so the mooks can function with mundane items - non-masterwork, I mean - and the big bads should have more intersting stuff, but less of it. I liked the Magic Item Comendium take on items, although the organization is tough on my brain. Items that do a couple things, only a couple of times a day are the way to go.
In 1st and 2nd edition, I tended to give out fewer items, but they tended to be better than what the 3E guidelines call for. I figured you could divide a PC's level by 2 to get the bonus of weapon they probably should have, and didn't worry too much about things like flaming swords or cold tongues being more useful. We saw way less potions and wands, and almost no stat boosting magic (there were only a few items that did this anyway). Wizards had staves by 7th level or so, you might see a staff of power by 10th, a staff of the magi by 14th... With no hard and fast guidelines, I just eyeballed it and it worked out very well.