In the group I'm GM'ing for at the moment we're trying such a system. We're only at 1st-level though so can't really say how it's panned out but my hope is that the players start focusing more on character development rather than item acquisition.
The system I'm using gives all PC's a cumulative +1 bonus to attacks, damage and defences as well as a +1d6 critical strike damage bonus at 1st, 6th, 11th, 16th, 21st and 26th-levels.
All magical item bonuses to hit, damage and defences are removed entirely.
Items that increase the critical strike damage bonus still do so but only once per magical item plus. So if a character has a +1 vicious longsword and they're 6th-level, then they would get a bonus of +1d12 and +1d6 to the critical damage amount rather than +2d12.
I also go a step further and remove the need for the Expertise feats as I don't believe in having 'feat taxes'. To compensate for this I use Masterwork Weapons & Implements. These work by giving a bonus to hit for those who have the ability to take advantage of the property. The bonus can be up to +3 however each bonus is also tier-based. Up to 10th-level, a person can only ever benefit from +1 of a masterwork items bonus, up to 20th-level they can benefit from up to +2 and 21st and beyond can benefit from up to +3.
All magical items are masterwork however not all masterwork items are magical.
This also changes the dynamics of items in the game because you can give out masterwork swords galore to the PC's enemies and it doesn't create the '+1 longsword monty haul dilemma" because as prized as masterwork items would be, they're only as valuable as the person that wields them, which reduces your market significantly.