I've always used encumbrance. The bookeeping can be a hassle but I keep copies of everyone's character sheets on my computer anyway so it's not that bad as I can just deal with the bulk of it between sessions and have the players add-in the random items they pick up mid-session themselves.
I usually like a fair degree of realism (or at least believability) in my games so I feel like encumbrance is pretty much a neccesity.
And having just a couple of hours ago returned from a 9 mile hike up and down 4000 ft. in the mountains with a 39 lb. pack, I'd say the encumbrance rules are pretty fair, and if anything are a bit generous. At least that's the case at the average ability range (calculating myself at Str 10, just on the low side of average).