in 4E getting new upgraded items wasn't really a reward, it was more of a hamster wheel. You didn't get better because of the +5 weapon, you just needed it to keep up.
This goes directly to one aspect of player game experience.
One feature of classic D&D (LBB, AD&D, B/X) played in the manner that the rulebooks present, is that the game play experience changes quite a bit over time:
*Low level PCs are highly vulnerable, and the play experience will be heavily shaped by the dungeon the GM has built;
*Mid-level PCs (say, 3rd to 6th-ish) are able to assert quite a bit of control over their dungeon play - I would say this is where the whole scout-prep-assault approach that Gygax sets out in his PHB becomes viable;
*At the same level, wilderness/hex-crawl play also becomes feasible, and this opens up a very logistical/wargame-y aspect of play (tracking rations, putting together mule trains, etc);
*At name level, the game gives PCs (especially clerics and fighters) military forces, opening up a literal wargame aspect of play, together with the logistical/economic aspects of domain management.
At name level,
one-on-one/skirmish combat is not normally going to be all that exciting as a component of play: the maths of to hit chances vs the range of ACs the game typically supports produce this outcome. A module like D3 tries to compensate for this - by creating scope for name level PCs to have one-on-one/skirmish combats that have the same sort of excitement as low- and mid-level ones - by giving the Drow NPCs magic items sufficient to balance the to hit bonuses of high level PCs.
The D3-ish approach seems to have become more common over time.
In 4e D&D, there is no change in the basic mechanics of game play between 1st and 30th level: it is either one-on-one/skirmish combat; or skill challenges. The changes are predominantly (i) in the fiction (as per the tiers of play), and (ii) especially for combat, in the "sideways" growth of PC abilities (invisibility, flight, conditions like domination, etc).
In this sort of game, having the players get "better" in the sense of mathematically more likely to succeed will tend to produce boring play. A D3-ish approach is needed. Whether this is done via inherent PC elements or extrinsic elements (like magic items) is mostly about taste, and in the case of D&D also legacy.
I certainly think it would be good for a rulebook to talk about the risks (if they are there) of magic items making certain aspects of game play boring!